Expedia Group Inc.

11/08/2024 | Press release | Distributed by Public on 11/08/2024 05:01

Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

expe-20240930
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 September 30, 2024
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
The number of shares outstanding of each of the registrant's classes of common stock as of October 25, 2024 was:
Common stock, $0.0001 par value per share 122,823,018 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 September 30, 2024
Contents
Part I
Financial Information
Item 1
Consolidated Financial Statements
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)
2
Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)
3
Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023
4
Consolidated Statements of Stockholders Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)
5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)
7
Notes to Consolidated Financial Statements (unaudited)
8
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3
Quantitative and Qualitative Disclosures about Market Risk
34
Item 4
Controls and Procedures
35
Part II
Other Information
Item 1
Legal Proceedings
36
Item 1A
Risk Factors
37
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
37
Item 5
Other Information
37
Item 6
Exhibits
38
Signature
39
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
September 30, 		Nine months ended
September 30,
2024 2023 2024 2023
Revenue $ 4,060 $ 3,929 $ 10,507 $ 9,952
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)
388 412 1,108 1,233
Selling and marketing - direct 1,855 1,671 5,298 4,737
Selling and marketing - indirect (1)
197 185 580 563
Technology and content(1)
320 340 992 1,001
General and administrative (1)
229 194 595 572
Depreciation and amortization 211 208 626 599
Impairment of goodwill - 297 - 297
Impairment of intangible assets 33 15 33 15
Legal reserves, occupancy tax and other 59 - 100 6
Restructuring and related reorganization charges(1)
6 - 72 -
Operating income 762 607 1,103 929
Other income (expense):
Interest income 67 56 185 162
Interest expense (61) (62) (184) (184)
Other, net 106 (157) 103 (60)
Total other income (expense), net 112 (163) 104 (82)
Income before income taxes 874 444 1,207 847
Provision for income taxes (190) (139) (284) (295)
Net income 684 305 923 552
Net loss attributable to non-controlling interests - 120 12 113
Net income attributable to Expedia Group, Inc. $ 684 $ 425 $ 935 $ 665
Earnings per share attributable to Expedia Group, Inc. available to common stockholders:
Basic $ 5.28 $ 2.98 $ 7.07 $ 4.51
Diluted 5.04 2.87 6.75 4.37
Shares used in computing earnings per share (000's):
Basic 129,758 142,228 132,393 147,253
Diluted 135,732 147,748 138,655 152,172
_______
(1) Includes stock-based compensation as follows:
Cost of revenue $ 3 $ 3 $ 9 $ 10
Selling and marketing 19 20 61 60
Technology and content 40 35 120 105
General and administrative 85 47 167 139
Restructuring and related reorganization charges - - 8 -
See accompanying notes.
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EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
Three months ended
September 30, 		Nine months ended
September 30,
2024 2023 2024 2023
Net income $ 684 $ 305 $ 923 $ 552
Currency translation adjustments, net of tax(1)
33 (39) 16 (8)
Comprehensive income 717 266 939 544
Less: Comprehensive income (loss) attributable to non-controlling interests 4 (126) (11) (115)
Comprehensive income attributable to Expedia Group, Inc. $ 713 $ 392 $ 950 $ 659
(1)Currency translation adjustments include a tax expense of approximately $8 million for both the three and nine months ended September 30, 2024 and a tax expense of approximately $1 million and a tax benefit of approximately $1 million for the three and nine months ended September 30, 2023 primarily associated with net investment hedges.
See accompanying notes.
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EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares, which are reflected in thousands, and par value)
September 30,
2024 		December 31,
2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,722 $ 4,225
Restricted cash and cash equivalents 1,324 1,436
Short-term investments 196 28
Accounts receivable, net of allowance of $60 and $46
3,764 2,786
Income taxes receivable 68 47
Prepaid expenses and other current assets 758 708
Total current assets 10,832 9,230
Property and equipment, net 2,400 2,359
Operating lease right-of-use assets 334 357
Long-term investments and other assets 1,527 1,238
Deferred income taxes 514 586
Intangible assets, net 947 1,023
Goodwill 6,851 6,849
TOTAL ASSETS $ 23,405 $ 21,642
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, merchant $ 1,980 $ 2,041
Accounts payable, other 1,178 1,077
Deferred merchant bookings 9,413 7,723
Deferred revenue 173 164
Income taxes payable 114 26
Accrued expenses and other current liabilities 887 752
Current maturities of long-term debt 1,042 -
Total current liabilities 14,787 11,783
Long-term debt, excluding current maturities 5,221 6,253
Deferred income taxes 34 33
Operating lease liabilities 291 314
Other long-term liabilities 506 473
Commitments and contingencies
Stockholders' equity:
Common stock: $.0001 par value; Authorized shares: 1,600,000
- -
Shares issued: 286,437 and 282,149; Shares outstanding: 123,316 and 131,522
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 15,890 15,398
Treasury stock - Common stock and Class B, at cost; Shares 170,397 and 157,903
(14,677) (13,023)
Retained earnings (deficit) 303 (632)
Accumulated other comprehensive income (loss) (194) (209)
Total Expedia Group, Inc. stockholders' equity 1,322 1,534
Non-redeemable non-controlling interests 1,244 1,252
Total stockholders' equity 2,566 2,786
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,405 $ 21,642
See accompanying notes.
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EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions, except share and per share data)
(Unaudited)
Three months ended September 30, 2023 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 June 30. 2023 280,006,237 $ - 12,799,999 $ - $ 15,072 148,398,159 $ (11,937) $ (1,169) $ (207) $ 1,457 $ 3,216
Net income (loss) 425 (120) 305
Other comprehensive loss, net of taxes (33) (6) (39)
Proceeds from exercise of equity instruments and employee stock purchase plans 951,044 - 13 13
Withholding taxes for stock options (1) (1)
Treasury stock activity related to vesting of equity instruments 275,050 (30) (30)
Common stock repurchases 5,229,924 (577) (577)
Other changes in ownership of non-controlling interests 2 (78) (76)
Stock-based compensation expense 121 121
Other 20 (6) (20) (6)
Balance as of September 30. 2023 280,957,281 $ - 12,799,999 $ - $ 15,227 153,903,133 $ (12,550) $ (764) $ (240) $ 1,253 $ 2,926
Nine months ended September 30, 2023 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, 2022 278,264,235 $ - 12,799,999 $ - $ 14,795 137,783,429 $ (10,869) $ (1,409) $ (234) $ 1,445 $ 3,728
Net income (loss) 665 (113) 552
Other comprehensive loss, net of taxes (6) (2) (8)
Proceeds from exercise of equity instruments and employee stock purchase plans 2,693,046 - 53 53
Withholding taxes for stock options (5) (5)
Treasury stock activity related to vesting of equity instruments 722,302 (75) (75)
Common stock repurchases 15,397,402 (1,594) (1,594)
Other changes in ownership of non-controlling interests 7 (77) (70)
Stock-based compensation expense 357 357
Other 20 (12) (20) (12)
Balance as of September 30. 2023 280,957,281 $ - 12,799,999 $ - $ 15,227 153,903,133 $ (12,550) $ (764) $ (240) $ 1,253 $ 2,926
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EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions, except share and per share data)
(Unaudited)
Three months ended September 30, 2024 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 June 30. 2024 284,861,071 $ - 12,799,999 $ - $ 15,697 166,856,537 $ (14,204) $ (381) $ (223) $ 1,237 $ 2,126
Net income 684 - 684
Other comprehensive income, net of taxes 29 4 33
Proceeds from exercise of equity instruments and employee stock purchase plans 1,575,912 - 29 29
Treasury stock activity related to vesting of equity instruments 475,109 (62) (62)
Common stock repurchases 3,065,558 (407) (407)
Other changes in ownership of non-controlling interests (1) - 3 2
Stock-based compensation expense 165 165
Other - (4) - (4)
Balance as of September 30. 2024 286,436,983 $ - 12,799,999 $ - $ 15,890 170,397,204 $ (14,677) $ 303 $ (194) $ 1,244 $ 2,566
Nine months ended September 30, 2024 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, 2023 282,148,576 $ - 12,799,999 $ - $ 15,398 157,902,985 $ (13,023) $ (632) $ (209) $ 1,252 $ 2,786
Net income (loss) 935 (12) 923
Other comprehensive income, net of taxes 15 1 16
Proceeds from exercise of equity instruments and employee stock purchase plans 4,288,407 - 77 77
Withholding taxes for stock options (2) (2)
Treasury stock activity related to vesting of equity instruments 1,294,581 (162) (162)
Common stock repurchases 11,199,638 (1,479) (1,479)
Other changes in ownership of non-controlling interests 1 - 3 4
Stock-based compensation expense 416 416
Other - (13) - (13)
Balance as of September 30. 2024 286,436,983 $ - 12,799,999 $ - $ 15,890 170,397,204 $ (14,677) $ 303 $ (194) $ 1,244 $ 2,566
See accompanying notes.
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EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine months ended
September 30,
2024 2023
Operating activities:
Net income $ 923 $ 552
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment, including internal-use software and website development 582 555
Amortization of intangible assets 44 44
Impairment of goodwill and intangible assets 33 312
Amortization of stock-based compensation 365 314
Deferred income taxes 66 49
Foreign exchange (gain) loss on cash, restricted cash and short-term investments, net - 32
Realized (gain) loss on foreign currency forwards, net (21) 35
(Gain) loss on minority equity investments, net (121) 73
Other, net 69 34
Changes in operating assets and liabilities:
Accounts receivable (1,007) (704)
Prepaid expenses and other assets (19) 43
Accounts payable, merchant (61) 178
Accounts payable, other, accrued expenses and other liabilities 235 223
Tax payable/receivable, net 109 (55)
Deferred merchant bookings 1,690 1,243
Net cash provided by operating activities 2,887 2,928
Investing activities:
Capital expenditures, including internal-use software and website development (565) (669)
Purchases of investments (405) -
Sales and maturities of investments 43 49
Other, net 26 (15)
Net cash used in investing activities (901) (635)
Financing activities:
Purchases of treasury stock (1,641) (1,669)
Proceeds from exercise of equity awards and employee stock purchase plan 77 53
Other, net (26) 17
Net cash used in financing activities (1,590) (1,599)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents (11) (53)
Net increase in cash, cash equivalents and restricted cash and cash equivalents 385 641
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 5,661 5,851
Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 6,046 $ 6,492
Supplemental cash flow information
Cash paid for interest $ 197 $ 197
Income tax payments, net 97 228
See accompanying notes.
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Notes to Consolidated Financial Statements
September 30, 2024
(Unaudited)
Note 1 - Basis of Presentation
Description of Business
Expedia Group, Inc. and its subsidiaries provide travel products and services to leisure and corporate travelers in the United States and abroad as well as various media and advertising offerings to travel and non-travel advertisers. These travel products and services are offered through a diversified portfolio of brands including: Brand Expedia®, Hotels.com®, Expedia® Partner Solutions, Vrbo®, trivago®, Orbitz®, Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media Solutions, CarRentals.com™ and Expedia CruisesTM. In addition, many of these brands have related international points of sale. We refer to Expedia Group, Inc. and its subsidiaries collectively as "Expedia Group," the "Company," "us," "we" and "our" in these consolidated financial statements.
Basis of Presentation
These accompanying financial statements present our results of operations, financial position and cash flows on a consolidated basis. The unaudited consolidated financial statements include Expedia Group, Inc., our wholly-owned subsidiaries, and entities we control, or in which we have a variable interest and are the primary beneficiary of expected cash profits or losses. We record our investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity method or at fair value. We have eliminated significant intercompany transactions and accounts.
We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting. We have included all adjustments necessary for a fair presentation of the results of the interim period. These adjustments consist of normal recurring items. Our interim unaudited consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), previously filed with the Securities and Exchange Commission ("SEC"). trivago is a separately listed company on the Nasdaq Global Select Market and, therefore is subject to its own reporting and filing requirements, which could result in possible differences that are not expected to be material to Expedia Group.
Accounting Estimates
We use estimates and assumptions in the preparation of our interim unaudited consolidated financial statements in accordance with GAAP. Our estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our interim unaudited consolidated financial statements. These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results could differ significantly from these estimates. The significant estimates underlying our interim unaudited consolidated financial statements include revenue recognition; recoverability of current and long-lived assets, intangible assets and goodwill; income and transactional taxes, such as potential settlements related to occupancy and excise taxes; loss contingencies; deferred loyalty rewards; stock-based compensation; accounting for derivative instruments and provisions for credit losses, customer refunds and chargebacks.
Reclassifications
We have reclassified prior period financial statements to conform to the current period presentation.
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and winter holiday travel. The number of bookings typically decreases in the fourth quarter. Since revenue for most of our travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked, revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our alternative accommodations business. Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the year, with the relevant stays occurring during the peak summer travel months. The seasonal revenue impact is exacerbated with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we typically realize in closer alignment to
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Notes to Consolidated Financial Statements - (Continued)
booking volumes, and the more stable nature of our fixed costs. As a result on a consolidated basis, revenue and income are typically the lowest in the first quarter and highest in the third quarter.
Note 2 - Summary of Significant Accounting Policies
Recent Accounting Policies Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued new guidance that modifies the disclosure and presentation requirements of reportable segments. The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.
In December 2023, the FASB issued new guidance to improve its income tax disclosure requirements. Under the new guidance, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). The new guidance is effective for public business entities for annual periods beginning after December 15, 2024. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.
Significant Accounting Policies
Below are the significant accounting policies with interim disclosure requirements. For a comprehensive description of our accounting policies, refer to our 2023 Form 10-K.
Revenue
Prepaid Merchant Bookings. We classify payments made to suppliers in advance of Vrbo performance obligations as prepaid merchant bookings included within prepaid and other current assets. Prepaid merchant bookings was $333 million as of September 30, 2024 and $365 million as of December 31, 2023.
Deferred Merchant Bookings. We classify cash payments received in advance of our performance obligations as deferred merchant bookings. At December 31, 2023, $6.9 billion of advance cash payments was reported within deferred merchant bookings, $5.7 billion of which was recognized resulting in $901 million of revenue during the nine months ended September 30, 2024. At September 30, 2024, the related balance was $8.5 billion.
At December 31, 2023, $871 million of deferred loyalty rewards was reported within deferred merchant bookings, $678 million of which was recognized within revenue during the nine months ended September 30, 2024. At September 30, 2024, the related balance was $946 million.
Deferred Revenue. At December 31, 2023, $164 million was recorded as deferred revenue, $122 million of which was recognized as revenue during the nine months ended September 30, 2024. At September 30, 2024, the related balance was $173 million.
Practical Expedients and Exemptions. We have used the portfolio approach to account for our loyalty points as the rewards programs share similar characteristics within each program in relation to the value provided to the traveler and their breakage patterns. Using this portfolio approach is not expected to differ materially from applying the guidance to individual contracts. However, we will continue to assess and refine, if necessary, how a portfolio within each rewards program is defined.
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
Cash, Restricted Cash, and Cash Equivalents
Our cash and cash equivalents include cash and liquid financial instruments, including money market funds and term deposit investments, with maturities of three months or less when purchased. Restricted cash includes cash and cash equivalents that is restricted through legal contracts, regulations or our intention to use the cash for a specific purpose. Our restricted cash
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Notes to Consolidated Financial Statements - (Continued)
primarily relates to certain traveler deposits and to a lesser extent collateral for office leases. The following table reconciles cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total amount presented in our consolidated statements of cash flows:
September 30,
2024 		December 31,
2023
(in millions)
Cash and cash equivalents $ 4,722 $ 4,225
Restricted cash and cash equivalents 1,324 1,436
Total cash, cash equivalents and restricted cash and cash equivalents in the consolidated statements of cash flows $ 6,046 $ 5,661
Accounts Receivable and Allowances
Accounts receivable are generally due within thirty days and are recorded net of an allowance for expected uncollectible amounts. We consider accounts outstanding longer than the contractual payment terms as past due. The risk characteristics we generally review when analyzing our accounts receivable pools primarily include the type of receivable (for example, credit card vs hotel collect), collection terms and historical or expected credit loss patterns. For each pool, we make estimates of expected credit losses for our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history continually updated for new collections data, the credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions and other factors that may affect our ability to collect from customers. The provision for estimated credit losses is recorded as cost of revenue in our consolidated statements of operations. During the nine months ended September 30, 2024, we recorded approximately $29 million of incremental allowance for expected uncollectible accounts, offset by $15 million of write-offs.
Note 3 - Fair Value Measurements
Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 are classified using the fair value hierarchy in the table below:
Total Level 1 Level 2
(In millions)
Assets
Cash equivalents:
Money market funds $ 164 $ 164 $ -
Term deposits and certificates of deposit 93 - 93
Corporate debt securities 32 - 32
U.S. treasury securities 15 - 15
Commercial paper 7 - 7
Derivatives:
Foreign currency forward contracts 34 - 34
Cross-currency interest rate swaps 3 - 3
Investments:
Equity investments 705 705 -
Corporate debt securities 284 - 284
U.S. treasury securities 50 - 50
Asset-backed securities 49 - 49
Term deposits and certificates of deposit 8 - 8
U.S. agency securities 3 - 3
Total assets $ 1,447 $ 869 $ 578
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Notes to Consolidated Financial Statements - (Continued)
Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 are classified using the fair value hierarchy in the table below:
Total Level 1 Level 2
(In millions)
Assets
Cash equivalents:
Money market funds $ 168 $ 168 $ -
Term deposits 71 - 71
Derivatives:
Cross-currency interest rate swaps 8 - 8
Investments:
Term deposits 28 - 28
Equity investments 584 584 -
Total assets $ 859 $ 752 $ 107
Liabilities
Derivatives:
Foreign currency forward contracts $ 9 $ - $ 9
We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash equivalents and investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a Level 2 input. Valuation of the cross-currency interest rate swaps is based on foreign currency exchange rates and the current interest rate curve, Level 2 inputs.
We hold term deposit investments with financial institutions. Term deposits with original maturities of less than three months are classified as cash equivalents. Those with remaining maturities of less than one year are classified within short-term investments and those with remaining maturities of greater than one year are classified within long-term investments and other assets.
As of September 30, 2024 and December 31, 2023, our cash and cash equivalents consisted primarily of term deposits, certificates of deposit, money market funds, and corporate debt securities with maturities of three months or less and bank account balances.
We primarily invest in investment grade corporate debt securities, U.S. treasury securities, and asset-backed securities, all of which are classified as available-for-sale. As of September 30, 2024, we had $196 million of short-term and $198 million of long-term available-for-sale investments, which generally mature within 4 years. The amortized cost basis of the investments approximated their fair value with gross unrealized gains and losses of less than $1 million. We review our debt securities on a regular basis for impairment. During the nine months ended September 30, 2024, we did not recognize an allowance for credit-related losses on any of our investments.
We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating liabilities. As of September 30, 2024, we were party to outstanding forward contracts hedging our liability exposures with a total net notional value of $4.6 billion. We had a net forward asset of $34 million ($60 million gross forward asset) as of September 30, 2024 recorded in prepaid expenses and other current assets and a net forward liability of $9 million ($28 million gross forward liability) as of December 31, 2023 recorded in accrued expenses and other current liabilities. We recorded $123 million and $(43) million in net gains (losses) from foreign currency forward contracts during the three months ended September 30, 2024 and 2023, as well as $65 million and $(58) million during the nine months ended September 30, 2024 and 2023.
We maintain two fixed-to-fixed cross-currency interest rate swaps with an aggregate notional amount of €300 million and maturity dates of February 2026. The swaps were designated as net investment hedges of Euro assets with the objective to protect the U.S. dollar value of our net investments in the Euro foreign operations due to movements in foreign currency. The fair value of the cross-currency interest rate swaps was a $3 million and an $8 million asset as of as of September 30, 2024 and December 31, 2023, recorded in long-term investments and other assets. The gain recognized in interest expense was $4 million during both the nine months ended September 30, 2024 and 2023.
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Notes to Consolidated Financial Statements - (Continued)
Our equity investments include our marketable equity investments in Despegar and Global Business Travel Group, Inc., both publicly traded companies, which are included in long-term investments and other assets in our consolidated balance sheets. During the nine months ended September 30, 2024 and 2023, we recognized net gains (losses) of approximately $121 million and $(73) million within other, net in our consolidated statements of operations related to the fair value changes of these equity investments.
Assets Measured at Fair Value on a Non-recurring Basis
Our non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity method investments for which we have not elected the fair value option, are adjusted to fair value when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements are based predominately on Level 3 inputs. We measure our minority investments that do not have readily determinable fair values at cost less impairment, adjusted by observable price changes with changes recorded within other, net on our consolidated statements of operations.
Goodwill. During the third quarter of 2023, we recognized a goodwill impairment charge of $297 million related to our trivago segment. This impairment charge resulted from trivago's recent strategic shift which included intensifying its brand marketing investments with an anticipated decrease in profitability. As a result, we concluded that sufficient indicators existed to require us to perform an interim quantitative assessment of goodwill for our trivago segment as of September 30, 2023, in which we compared the fair value of the reporting unit to its carrying value. The fair value estimate for the reporting unit was based on a blended analysis of the present value of future discounted cash flows and market value approach, Level 3 inputs. The significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows and the long-term rate of growth. Our assumptions were based on the actual historical performance of the reporting unit and considered the weakening of operating results, and implied risk premiums based on market prices of our equity and debt as of the assessment date. Our significant estimates in the market approach model included identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The excess of the reporting unit's carrying value over our estimate of the fair value was recorded as the goodwill impairment charge in the third quarter of 2023. As of September 30, 2023, our trivago segment had no goodwill remaining.
Intangible Assets. During the three and nine months ended September 30, 2024, we recognized intangible impairment charges of $33 million related to an indefinite-lived trade name within our trivago segment that resulted a decline in revenue in the current year as well as trivago's share price decline reducing its total market capitalization relative to its assets. During the three and nine months ended September 30, 2023, we recognized intangible impairment charges of $15 million, related to an indefinite-lived trade name within our trivago segment that resulted from a decrease in the estimated royalty rate. The indefinite-lived trade name asset, classified as a Level 3 measurement, was valued using the relief-from-royalty method, which includes unobservable inputs, including projected revenues, royalty rates and weighted average cost of capital.
Minority Investments without Readily Determinable Fair Values. As of September 30, 2024 and December 31, 2023, the carrying values of our minority investments without readily determinable fair values totaled $315 million and $330 million. During the nine months ended September 30, 2024, we sold a minority investment for $15 million and recognized an immaterial gain on the transaction. During the nine months ended September 30, 2023, we had no material gains or losses recognized related to these minority investments. As of September 30, 2024, total cumulative adjustments made to the initial cost basis of these investments included $105 million in unrealized downward adjustments (including impairments).
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Notes to Consolidated Financial Statements - (Continued)
Note 4 - Debt
The following table sets forth our outstanding debt:
September 30,
2024 		December 31,
2023
(In millions)
6.25% senior notes due 2025
$ 1,042 $ 1,039
5.0% senior notes due 2026
748 748
0% convertible senior notes due 2026
995 993
4.625% senior notes due 2027
747 746
3.8% senior notes due 2028
997 996
3.25% senior notes due 2030
1,240 1,238
2.95% senior notes due 2031
494 493
Total debt(1)
6,263 6,253
Current maturities of long-term debt (1,042) -
Long-term debt, excluding current maturities $ 5,221 $ 6,253
_______________
(1)Net of applicable discounts and debt issuance costs.
Outstanding Debt
Additional information about our $1 billion aggregate principal amount of unsecured 0% convertible senior notes due 2026 (the "Convertible Notes") and our otheroutstanding senior notes (collectively the "Senior Notes"), see Note 7 -Debt of the Notes to Consolidated Financial Statements in our 2023Form 10-K.
All of our outstanding Senior Notes are senior unsecured obligations issued by Expedia Group and guaranteed by certain domestic Expedia Group subsidiaries. The Senior Notes rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations of Expedia Group and the guarantor subsidiaries. In addition, the Senior Notes include covenants that limit our ability to (i) create certain liens, (ii) enter into sale/leaseback transactions and (iii) merge or consolidate with or into another entity or transfer substantially all of our assets. The Senior Notes are redeemable in whole or in part, at the option of the holders thereof, upon the occurrence of certain change of control triggering events at a purchase price in cash equal to 101% of the principal plus accrued and unpaid interest. Accrued interest related to the Senior Notes was $48 million and $73 million as of September 30, 2024 and December 31, 2023.
Estimated Fair Value.The total estimated fair value of our Senior Notes was approximately $5.2 billion and $5.1 billion as of September 30, 2024 and December 31, 2023. Additionally, the estimated fair value of the Convertible Notes was $954 million and $953 million as of September 30, 2024 and December 31, 2023. The fair value was determined based on quoted market prices in less active markets and is categorized accordingly as Level 2 in the fair value hierarchy.
Credit Facility
As of September 30, 2024, Expedia Group maintained a $2.5 billion revolving credit facility that matures in April 2027. As of September 30, 2024 and December 31, 2023, we had no revolving credit facility borrowings outstanding. Loans under the revolving credit facility bear interest at a rate equal to an index rate plus a margin (a) in the case of term benchmark loans, ranging from 1.00% to 1.75% per annum, depending on Expedia Group's credit ratings, and (b) in the case of base rate loans, ranging from 0.00% to 0.75% per annum, depending on Expedia Group's credit ratings. A fee is payable quarterly in respect of undrawn commitments under the revolving credit facility at a rate ranging from 0.10% to 0.25% per annum, depending on Expedia Group's credit ratings. The terms of the revolving credit facility require Expedia Group to not exceed a specified maximum consolidated leverage ratio as of the end of each fiscal quarter.
The revolving credit facility has a $120 million letter of credit ("LOC") sublimit, and the amount of LOCs issued under the facility reduced the credit amount available. Outstanding stand-by LOCs issued under the facility were $47 million and $40 million as of September 30, 2024 and December 31, 2023, respectively.
Note 5 - Stockholders' Equity
Treasury Stock
As of September 30, 2024, the Company's treasury stock was comprised of approximately 163.1 million shares of common stock and 7.3 million Class B shares. As of December 31, 2023, the Company's treasury stock was comprised of approximately 150.6 million shares of common stock and 7.3 million Class B shares.
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Notes to Consolidated Financial Statements - (Continued)
Share Repurchase Programs. In October 2023, the Executive Committee of the Board of Directors, pursuant to a delegation of authority from the Board, authorized a program to repurchase up to $5 billion of our common stock ("2023 Share Repurchase Program"). During the nine months ended September 30, 2024, we repurchased, through open market transactions, 11.2 million shares under the 2023 Share Repurchase Program for a total cost of $1.5 billion, excluding transaction costs and excise tax due under the Inflation Reduction Act of 2022, representing an average repurchase price of $132.04 per share. As of September 30, 2024, $3.4 billion remains authorized for repurchase under the 2023 Share Repurchase Program. Our 2023 Share Repurchase Program does not have fixed expiration dates and does not obligate the Company to acquire any specific number of shares. Under the program, shares may be repurchased in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be subject to the discretion of the Company and depend on a variety of factors, including the market price of Expedia Group's common stock, general market and economic conditions, regulatory requirements and other business considerations. Subsequent to the end of the third quarter of 2024, we repurchased an additional 0.8 million shares for a total cost of $126 million, excluding transaction costs and excise tax, representing an average purchase price of $155.34 per share.
Accumulated Other Comprehensive Income (Loss)
The balance of AOCI as of September 30, 2024 and December 31, 2023 was comprised of foreign currency translation adjustments. These translation adjustments include foreign currency transaction gains as of September 30, 2024 of $2 million ($3 million before tax) and $6 million ($8 million before tax) as of December 31, 2023 associated with our cross-currency interest rate swaps as described in Note 3 - Fair Value Measurements. Additionally, translation adjustments include foreign currency transaction losses of $7 million ($10 million before tax) as of both September 30, 2024 and December 31, 2023 associated with previously settled Euro-denominated notes that were designated as net investment hedges.
Note 6 - Earnings Per Share
The following table presents our basic and diluted earnings per share:
Three months ended
September 30, 		Nine months ended
September 30,
2024 2023 2024 2023
(In millions, except share and per share data)
Net income attributable to Expedia Group, Inc. $ 684 $ 425 $ 935 $ 665
Earnings per share attributable to Expedia Group, Inc. available to common stockholders:
Basic $ 5.28 $ 2.98 $ 7.07 $ 4.51
Diluted 5.04 2.87 6.75 4.37
Weighted average number of shares outstanding (000's):
Basic 129,758 142,228 132,393 147,253
Dilutive effect of:
Convertible Notes 3,921 3,921 3,921 3,921
Stock-based awards 2,053 1,599 2,341 998
Diluted 135,732 147,748 138,655 152,172
Basic earnings per share is calculated using our weighted-average outstanding common shares. The earnings per share amounts are the same for common stock and Class B common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.
Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards and common stock warrants as determined under the treasury stock method and of our Convertible Notes using the if-converted method. In periods when we recognize a net loss, we exclude the impact of outstanding stock awards and the potential share settlement impact related to our Convertible Notes from the diluted loss per share calculation as their inclusion would have an antidilutive effect. For the three and nine months ended September 30, 2024, approximately 3 million shares from outstanding stock awards have been excluded from the calculations of diluted earnings per share attributable to common stockholders because their effect would have been antidilutive. For the three and nine months ended September 30, 2023, approximately 5 million shares of outstanding stock awards were excluded.
Note 7 - Restructuring and Related Reorganization Charges
In February 2024, we committed to restructuring actions to recalibrate resources as most of the Company's organizational
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Notes to Consolidated Financial Statements - (Continued)
and technological transformation is now completed, which have resulted in headcount reductions. As a result, we recognized $6 million and $72 million in restructuring and related reorganization charges during the three and nine months ended September 30, 2024. The charges were predominately related to employee severance, stock-based compensation and benefit costs and approximately $11 million was included in accrued expenses and other current liabilities on our consolidated balance sheet as of September 30, 2024. Based on current plans which are subject to change, we expect total reorganization charges in the remainder of 2024 to be in the range of approximately $5 million to $10 million. These costs could be higher or lower should we make additional decisions in future periods that impact our reorganization efforts.
Note 8 - Income Taxes
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate. We record any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete items.
For the three months ended September 30, 2024, the effective tax rate was 21.7%, compared to 31.2% for the three months ended September 30, 2023. The change in the effective tax rate was primarily due to a nondeductible goodwill impairment and nondeductible mark-to-market charges recorded in the prior year period.
For the nine months ended September 30, 2024, the effective tax rate was 23.5%, compared to 34.8% for the nine months ended September 30, 2023. The change in the effective tax rate was primarily due to discrete tax effects of the TripAdvisor audit assessment recorded in the prior year period, as described below.
We are subject to taxation in the United States and foreign jurisdictions. Our income tax filings are regularly examined by federal, state, and foreign tax authorities. For tax years 2011 to 2013 and 2014 to 2016, the Internal Revenue Service ("IRS") issued final adjustments related to transfer pricing with our foreign subsidiaries. The 2011 to 2013 adjustments would result in federal income tax of approximately $244 million, subject to interest. The 2014 to 2016 adjustments would result in federal income tax of approximately $431 million, subject to interest. We do not agree with these adjustments and will continue to vigorously defend our position through administrative procedures. We are also under examination by the IRS for tax years 2017 to 2020.
On December 20, 2011, we completed a spin-off of TripAdvisor into a separate publicly traded corporation. Pursuant to the tax sharing agreement between Expedia Group and TripAdvisor, TripAdvisor is responsible for its potential income tax liabilities in connection with any consolidated income tax returns filed as a part of Expedia Group's consolidated income tax return prior to or in connection with the spin-off. TripAdvisor is required to indemnify Expedia Group for any such taxes, including interest, penalties, legal, and professional fees.
In 2023, TripAdvisor agreed in principle with the IRS to an assessed amount of $120 million, inclusive of interest and state tax effects, for transfer pricing adjustments with its foreign subsidiaries for the 2009 to 2011 tax years. The assessment is a tax liability for tax years when TripAdvisor was part of Expedia Group's consolidated income tax return and is covered by the indemnification pursuant to the tax sharing agreement. In May 2023, Expedia Group received from the IRS the final assessment for the 2009 through 2011 tax years related to the TripAdvisor matter. Expedia Group remitted $113 million in settlement payments to the IRS, as the primary obligor for this assessment, and received the reimbursement required from TripAdvisor in settlement of the indemnification receivable for this matter. During 2023, we recorded a total of $67 million of additional income tax expense and a corresponding tax indemnification adjustment in other, net in our consolidated statements of operations representing the estimate of the incremental assessed payment to the IRS, including state tax effects. During the second quarter of 2024, we recorded an additional $6 million of income tax expense related to interest adjustments for the 2010-2011 tax years.
Note 9 - Commitments and Contingencies
Legal Proceedings
In the ordinary course of business, we are a party to various lawsuits. Management does not expect these lawsuits to have a material impact on the liquidity, results of operations, or financial condition of Expedia Group. We also evaluate other potential contingent matters, including value-added tax, excise tax, sales tax, transient occupancy or accommodation tax and similar matters. We do not believe that the aggregate amount of liability that could be reasonably possible with respect to these matters would have a material adverse effect on our financial results; however, litigation is inherently uncertain and the actual losses incurred in the event that our legal proceedings were to result in unfavorable outcomes could have a material adverse effect on our business and financial performance.
Litigation Relating to Occupancy Taxes. One hundred three lawsuits have been filed by or against cities, counties and states involving hotel occupancy and other taxes. Four lawsuits are currently active. These lawsuits are in various stages and we
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Notes to Consolidated Financial Statements - (Continued)
continue to defend against the claims made in them vigorously. With respect to the principal claims in these matters, we believe that the statutes or ordinances at issue do not apply to us or the services we provide and, therefore, that we do not owe the taxes that are claimed to be owed. We believe that the statutes or ordinances at issue generally impose occupancy and other taxes on entities that own, operate or control hotels (or similar businesses) or furnish or provide hotel rooms or similar accommodations. To date, forty-nine of these lawsuits have been dismissed. Some of these dismissals have been without prejudice and, generally, allow the governmental entity or entities to seek administrative remedies prior to pursuing further litigation. Thirty-four dismissals were based on a finding that we and the other defendants were not subject to the local tax ordinance or that the local government lacked standing to pursue its claims. As a result of this litigation and other attempts by certain jurisdictions to levy such taxes, we have established a reserve for the potential settlement of issues related to hotel occupancy and other taxes, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of $3 million and $46 million as of September 30, 2024 and December 31, 2023. The reserve balance decreased $43 million as of September 30, 2024 due to the favorable resolution of two cases during the year. Our settlement reserve is based on our best estimate of probable losses and the ultimate resolution of these contingencies may be greater or less than the liabilities recorded. An estimate for a reasonably possible loss or range of loss in excess of the amount reserved cannot be made. Changes to the settlement reserve are included within legal reserves, occupancy tax and other in the consolidated statements of operations.
Pay-to-Play.Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as "pay-to-play." Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest.
We are in various stages of inquiry or audit with various tax authorities, some of which, including in the City of Los Angeles regarding hotel occupancy taxes, may impose a pay-to-play requirement to challenge an adverse inquiry or audit result in court.
Matters Relating to International VAT. We are in various stages of inquiry or audit in multiple European Union jurisdictions regarding the application of VAT to our European Union related transactions. While we believe we comply with applicable VAT laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional taxes.
During the third quarter of 2024, we entered into discussions with Italian authorities to resolve issues raised in a tax audit regarding the Company's purported Italian VAT obligations. While no tax assessment has been issued and we believe that Expedia Group has complied with Italian tax laws, we recorded a reserve for the potential settlement of these issues, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of $92 million as of September 30, 2024 within legal reserves, occupancy tax and other in the consolidated statements of operations. Our settlement reserve is based on our best estimate and the ultimate resolution of these contingencies may be greater or less than the liabilities recorded.
In certain jurisdictions, including the United Kingdom and Italy, we may be required to "pay-to-play" any VAT assessment prior to contesting its validity. While we believe that we will be successful based on the merits of our positions with regard to audits in pay-to-play jurisdictions, it is nevertheless reasonably possible that we could be required to pay any assessed amounts in order to contest or litigate the applicability of any assessments and an estimate for a reasonably possible amount of any such payments cannot be made.
Note 10 - Segment Information
We have the following reportable segments: B2C, B2B, and trivago. Our B2C segment provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com, Hotels.com, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com and CarRentals.com. Our B2B segment fuels a wide range of travel and non-travel companies including airlines, offline travel agents, online retailers, corporate travel management and financial institutions, who leverage our leading travel technology and tap into our diverse supply to augment their offerings and market Expedia Group rates and availabilities to their travelers. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites.
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 B2C and B2B segments includes allocations of certain expenses, primarily related to our global travel supply organization and the majority of costs from our product and technology platform, as well as facility costs and the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant lodging revenue. We
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Notes to Consolidated Financial Statements - (Continued)
base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, certain 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 B2C 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 nine months ended September 30, 2024 and 2023. 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 September 30, 2024
B2C B2B trivago Corporate &
Eliminations 		Total
(In millions)
Third-party revenue $ 2,780 $ 1,178 $ 102 $ - $ 4,060
Intersegment revenue - - 58 (58) -
Revenue $ 2,780 $ 1,178 $ 160 $ (58) $ 4,060
Adjusted EBITDA $ 1,028 $ 338 $ 14 $ (130) $ 1,250
Depreciation (133) (37) (1) (26) (197)
Amortization of intangible assets - - - (14) (14)
Impairment of intangible assets - - - (33) (33)
Stock-based compensation - - - (147) (147)
Legal reserves, occupancy tax and other - - - (59) (59)
Restructuring and related reorganization charges, excluding stock-based compensation - - - (6) (6)
Realized (gain) loss on revenue hedges (16) (16) - - (32)
Operating income (loss) $ 879 $ 285 $ 13 $ (415) 762
Other income, net 112
Income before income taxes 874
Provision for income taxes (190)
Net income 684
Net loss attributable to non-controlling interests -
Net income attributable to Expedia Group, Inc. $ 684
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Notes to Consolidated Financial Statements - (Continued)
Three months ended September 30, 2023
B2C B2B trivago Corporate &
Eliminations 		Total
(In millions)
Third-party revenue $ 2,819 $ 995 $ 115 $ - $ 3,929
Intersegment revenue - - 57 (57) -
Revenue $ 2,819 $ 995 $ 172 $ (57) $ 3,929
Adjusted EBITDA $ 1,056 $ 266 $ 18 $ (124) $ 1,216
Depreciation (137) (29) (2) (26) (194)
Amortization of intangible assets - - - (14) (14)
Impairment of goodwill - - - (297) (297)
Impairment of intangible assets - - - (15) (15)
Stock-based compensation - - - (105) (105)
Realized (gain) loss on revenue hedges 16 - - - 16
Operating income (loss) $ 935 $ 237 $ 16 $ (581) 607
Other expense, net (163)
Income before income taxes 444
Provision for income taxes (139)
Net income 305
Net loss attributable to non-controlling interests 120
Net income attributable to Expedia Group, Inc. $ 425
Nine months ended September 30, 2024
B2C B2B trivago Corporate &
Eliminations 		Total
(In millions)
Third-party revenue $ 7,198 $ 3,060 $ 249 $ - $ 10,507
Intersegment revenue - - 149 (149) -
Revenue $ 7,198 $ 3,060 $ 398 $ (149) $ 10,507
Adjusted EBITDA $ 1,897 $ 773 $ - $ (379) $ 2,291
Depreciation (395) (104) (4) (79) (582)
Amortization of intangible assets - - - (44) (44)
Impairment of intangible assets - - - (33) (33)
Stock-based compensation - - - (365) (365)
Legal reserves, occupancy tax and other - - - (100) (100)
Restructuring and related reorganization charges, excluding stock-based compensation - - - (64) (64)
Realized (gain) loss on revenue hedges 5 (5) - - -
Operating income (loss) $ 1,507 $ 664 $ (4) $ (1,064) 1,103
Other expense, net 104
Income before income taxes 1,207
Provision for income taxes (284)
Net income 923
Net loss attributable to non-controlling interests 12
Net income attributable to Expedia Group, Inc. $ 935
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Notes to Consolidated Financial Statements - (Continued)
Nine months ended September 30, 2023
B2C B2B trivago Corporate &
Eliminations 		Total
(In millions)
Third-party revenue $ 7,155 $ 2,524 $ 273 $ - $ 9,952
Intersegment revenue - - 154 (154) -
Revenue $ 7,155 $ 2,524 $ 427 $ (154) $ 9,952
Adjusted EBITDA $ 1,857 $ 605 $ 51 $ (365) $ 2,148
Depreciation (393) (81) (4) (77) (555)
Amortization of intangible assets - - - (44) (44)
Impairment of goodwill - - - (297) (297)
Impairment of intangible assets - - - (15) (15)
Stock-based compensation - - - (314) (314)
Legal reserves, occupancy tax and other - - - (6) (6)
Realized (gain) loss on revenue hedges 18 (6) - - 12
Operating income (loss) $ 1,482 $ 518 $ 47 $ (1,118) 929
Other expense, net (82)
Income before income taxes 847
Provision for income taxes (295)
Net income 552
Net loss attributable to non-controlling interests 113
Net income attributable to Expedia Group, Inc. $ 665
Revenue by Business Model and Service Type
The following table presents revenue by business model and service type:
Three months ended
September 30, 		Nine months ended
September 30,
2024 2023 2024 2023
(in millions)
Business Model:
Merchant $ 2,805 $ 2,739 $ 7,228 $ 6,833
Agency 953 918 2,469 2,408
Advertising, media and other 302 272 810 711
Total revenue
$ 4,060 $ 3,929 $ 10,507 $ 9,952
Service Type:
Lodging $ 3,317 $ 3,233 $ 8,407 $ 7,960
Air 104 100 330 324
Advertising and media 269 240 713 616
Other(1)
370 356 1,057 1,052
Total revenue
$ 4,060 $ 3,929 $ 10,507 $ 9,952
____________________________
(1)Other includes car rental, insurance, activities and cruise revenue, among other revenue streams, none of which are individually material.
Our B2C and B2B segments generate revenue from the merchant, agency and advertising, media and other business models as well as all service types. trivago segment revenue is generated through advertising and media.
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Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1A, "Risk Factors," as well as those discussed elsewhere in this report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words such as "anticipates," "believes," "could," "estimates," "expects," "goal," "intends," "likely," "may," "plans," "potential," "predicts," "projected," "seeks," "should" and "will," or the negative of these terms or other similar expressions, among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation to, and do not intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.
The information included in this management's discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2023.
Overview
Expedia Group's mission is to power global travel for everyone, everywhere. We believe travel is a force for good. Travel is an essential human experience that strengthens connections, broadens horizons and bridges divides. We help reduce the barriers to travel, making it easier, more enjoyable, more attainable and more accessible. We bring the world within reach for customers and partners around the globe. We leverage our supply portfolio, platform and technology capabilities across an extensive portfolio of consumer brands, and provide solutions to our business partners, to empower travelers to efficiently research, plan, book and experience travel. We make available, on a stand-alone and package basis, travel services provided by numerous lodging properties, airlines, car rental companies, activities and experiences providers, cruise lines, alternative accommodations property owners and managers, and other travel product and service companies. We also offer travel and non-travel advertisers access to a potential source of incremental traffic and transactions through our various media and advertising offerings on our websites.
All percentages within this section are calculated on actual, unrounded numbers.
Trends
Starting in early 2020, the COVID-19 pandemic, and measures to contain the virus, including government travel restrictions and quarantine orders, had an unprecedented impact on the global travel industry and materially and negatively impacted our business, financial results and financial condition. Travel was severely depressed during 2020, with reduced levels of new bookings. In 2021, we began to see a bookings recovery. In 2022, there was a strong, but uneven, recovery in travel demand with different regions around the world experiencing different rates of recovery. In 2023, the overall reopening of the Asia-Pacific region and general recovery outside of the United States was a factor in the gross bookings year-over-year growth rate for our B2B segment, but any other lingering impacts of the pandemic did not have a significant impact on our businesses, and we expect that to remain the case for future periods.
More recently, inflation and other macroeconomic pressures in the U.S. and the global economy, such as interest rates and currency fluctuations and energy price volatility, as well as evolving geopolitical conflicts, have contributed to an increasingly complex business environment. Our future operational results may be subject to volatility, particularly in the short-term, due to the impact of the aforementioned trends. Broad, sustained negative economic impacts could put strain on our suppliers, business and service partners, which increases the risk of credit losses and service level or other disruptions.
Additionally, further health-related events, political instability, geopolitical conflicts, acts of terrorism, significant fluctuations in currency values, sustained levels of increased inflation, sovereign debt issues, and natural disasters, are examples
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of other events that could have a negative impact on the travel industry in the future.
Despite these factors, we have witnessed a healthy but more normalized travel demand environment in the first nine months of 2024, as consumers continue to prioritize spend on travel and experiences over other discretionary spending.
Online Travel
Increased usage and familiarity with the internet have continued to drive rapid growth in online penetration of travel expenditures. Online penetration is higher in the U.S. and Western European markets with online penetration rates in some emerging markets, such as Latin America and Eastern European regions, lagging behind those regions. Emerging markets continue to present an attractive growth opportunity for our business, while also attracting many competitors to online travel. The industry is expected to remain highly competitive for the foreseeable future. In addition to the growth of online travel agencies, we have seen continued interest in the online travel industry from search engine companies such as Google, evidenced by continued product enhancements, and prioritizing its own AdWords and metasearch products such as Google Hotel Ads and Google Flights, in search results. Competitive entrants such as "metasearch" companies, including Kayak.com (owned by Booking Holdings), trivago (in which Expedia Group owns a majority interest) as well as TripAdvisor, introduced differentiated features, pricing and content compared with the legacy online travel agency companies, as well as various forms of direct or assisted booking tools. Further, airlines and lodging companies are aggressively pursuing direct online distribution of their products and services. In addition, the increasing popularity of the "sharing economy," accelerated by online penetration, has had a direct impact on the travel and lodging industry. Businesses such as Airbnb, Vrbo and Booking.com have emerged as the leaders, bringing incremental alternative accommodation and vacation rental inventory to the market. Other competitors have arisen, including vacation rental property managers, who operate their own booking sites in addition to listing on Airbnb, Vrbo, and Booking.com. Additionally, traditional consumer ecommerce players have expanded their local offerings by adding hotel offers to their websites. Ride sharing app Uber has added transportation and experience offerings to its app via partnerships with other travel providers. Our B2B business has grown significantly but faces competition from other online travel agencies ("OTAs") with B2B offerings, as well as other competitors, such as independent B2B businesses.
The online travel industry also saw the development of alternative business models and variations in the timing of payment by travelers and to suppliers, which in some cases place pressure on historical business models. In particular, the agency hotel model saw rapid adoption in Europe. Expedia Group facilitates both merchant (Expedia Collect) and agency (Hotel Collect) hotel offerings with our hotel supply partners through both agency-only contracts as well as our hybrid Expedia Traveler Preference ("ETP") program, which offers travelers the choice of whether to pay Expedia Group at the time of booking or pay the hotel at the time of stay.
In 2022, we began evolving our strategy from being largely transactionally focused, where we were primarily focused on acquiring customers through performance channels, to building a direct relationship with our customers by allocating more marketing spend towards our loyalty programs, paid app downloads, and brand awareness. While we maintain a large portfolio of consumer brands, we put the majority of our marketing efforts towards our three core consumer brands: Expedia, Hotels.com and Vrbo.
Lodging
Lodging includes both hotel and alternative accommodations. As a percentage of our total worldwide revenue in the third quarter of 2024, lodging accounted for 82%. Room nights booked grew 9% in the first nine months of 2024, as compared to growth of 12% in 2023 and 26% in 2022. Average Daily Rates ("ADRs") booked for Expedia Group declined 2% in the first nine monthsof 2024 and decreased 2% in 2023 and grew 3% in 2022. While trends are normalizing, our lodging business has seen a significant increase in ADRs compared to pre-pandemic levels, which were driven by broader industry trends, a mix shift to Vrbo and high ADR geographies.
As of September 30, 2024, our global lodging marketplace has over 3.5 million total lodging properties available. Our Vrbo brand has over 2.5 million online bookable alternative accommodations listings. Our other brands have over 1 million hotels and alternative accommodations.
Hotel. We generate the majority of our revenue through the facilitation of hotel reservations (stand-alone and package bookings). Our relationships and overall economics with hotel supply partners have been broadly stable in recent years. As we continue to expand the breadth and depth of our global hotel offering, in some cases we have reduced our economics in various geographies based on local market conditions. These impacts are due to specific initiatives intended to drive greater global size and scale through faster overall room night growth. Additionally, increased promotional activities such as growing loyalty programs, discounting, and couponing have contributed to declines in revenue per room night and profitability in certain cases.
Further, while the global lodging industry remains very fragmented, there has been consolidation in the hotel space among chains as well as ownership groups. In the meantime, certain hotel chains have been focusing on driving direct bookings on their own websites and mobile applications by advertising lower rates than those available on third-party websites as well as incentives such as loyalty programs, increased or exclusive product availability and complimentary benefits.
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Alternative Accommodations. Over the past decade, we expanded into the alternative accommodations market. Vrbo is a leader, specializing in unique whole home inventory, primarily in North American leisure markets, and represents an attractive growth opportunity for Expedia Group.
Vrbo has transitioned from a listings-based classified advertising model to an online transactional model that optimizes for both travelers and homeowner and property manager partners, with a goal of increasing monetization and driving growth through investments in marketing as well as in product and technology. Vrbo offers hosts subscription-based listing or pay-per-booking service models. It also generates revenue from a traveler service fee for bookings.
Since our hotel and alternative accommodation supplier agreements are generally negotiated on a percentage basis, any increase or decrease in ADRs has an impact on the revenue we earn per room night. In the future, we could see macroeconomic factors influence ADR trends, including rising living costs due to inflation and higher interest rates. Other factors that could lead to moderating ADRs include growth in hotel supply and the increase in alternative accommodation inventory.
Air
Similar to the rest of travel, the airlines experienced a surge in pent-up demand when COVID-19 restrictions were lifted, however they continued to operate at reduced capacity due to staffing shortages and supply chain disruptions. In 2023, airlines focused on adding capacity back to their networks, ending the year with global air capacity nearly recovered to 2019 levels.
In the future, we could encounter pressure on air remuneration as air carriers combine, certain supply agreements renew, and as we continue to add airlines to ensure local coverage in new markets.
Booked air tickets increased 5% in the first nine months of 2024, and increased 4% in 2023 and 8% in 2022. As a percentage of our total worldwide revenue in the third quarter of 2024, air accounted for 3%.
Advertising & Media
Our advertising and media business is principally driven by revenue generated by trivago, a leading hotel metasearch website, and Expedia Group Media Solutions, which is responsible for generating advertising revenue on our global online travel brands.
In the first nine months of 2024, we generated $464 million of advertising revenue from Expedia Group Media Solutions, a 35% increase from the same period in 2023.
In the first nine months of 2024, we generated $249 million of third-party revenue from trivago, a 9% decrease from the same period in 2023. Since the onset of COVID-19, online travel agencies, including ourselves, have reduced marketing spend on trivago. In 2023, the company adopted its marketing strategy and launched a new logo and visual identity, part of a push to rejuvenate its brand, demonstrate the relevance of its offerings and drive long-term growth.
As a percentage of our total worldwide revenue in the third quarter of 2024, total advertising and media accounted for 7%.
Business Strategy
As we endeavor to power global travel for everyone, everywhere our focus is to leverage our brand, supply and platform technology strength to provide greater services and value to our travelers, suppliers and business partners, and build longer-lasting direct relationships with our customers.
We believe the strength of our core brand portfolio and consistent enhancements to product and service offerings, combined with our global scale and broad-based supply, drive increasing value to customers and customer demand. With our significant global audience of travelers, and our deep and broad selection of travel products, we are also able to provide value to supply partners seeking to grow their business through sophisticated technology, a better understanding of travel retailing and reaching consumers in markets beyond their reach. Our deep product and supply footprint allows us to tailor offerings to target different types of consumers and travel needs, employ geographic segmentation in markets around the world, and leverage brand differentiation, among other benefits. We also market to consumers through a variety of channels, including internet search, metasearch and social and digital media. In 2024, we have accelerated our investments in global market expansion beyond our core markets that were our focus in the second half of 2023.
During 2020, Expedia Group unified its technology, product, data engineering and data science teams to build services and capabilities that can be leveraged across our business units to provide value-add services to our travel suppliers and serve our end customers. The unified team structure enables us to deliver more scalable services and operate more efficiently. We have also completed the migration of our core B2C brands onto a unified Brand Expedia technology front-end infrastructure, having migrated Hotels.com onto the infrastructure in 2022 and Vrbo in 2023. In 2024, we will continue to cement our leadership in the B2B segment as our B2B business also benefits from all the work we have done in product and technology for our B2C brands.
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As we continue to mature our shared platform infrastructure, our focus is on developing configurable technical capabilities that support various travel products while using simpler, standard architecture and common applications and frameworks. We believe this strategy will enable us to: simultaneously build pieces of technology that work in tandem; ship new capabilities and features faster; create a foundation for more innovative solutions; and achieve greater economies of scope and scale. Ultimately, we believe this will result in more product improvements faster and therefore better traveler experiences. In addition, over time, as we execute on our streamlined application development framework, we believe we can unlock additional platform service opportunities beyond the scope of our internal brands and business travel partners. All of our transaction-based businesses now benefit from our shared platform infrastructure, including customer servicing and support, data centers, search capabilities, payment processing, and fraud operations.
We also launched One Key in the United States in 2023, which serves as the unified loyalty program under Brand Expedia, Hotels.com and Vrbo, enabling travelers to cross-earn and cross-redeem rewards across these brands and our range of products such as air, hotels and alternative accommodations. In 2024, we also rolled out One Key in the United Kingdom. With greatly improved product driven by the latest in machine learning and artificial intelligence capabilities and One Key, we believe we will continue to drive greater retention, repeat and direct business.
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and winter holiday travel. The number of bookings typically decreases in the fourth quarter. Since revenue for most of our travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked, revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our alternative accommodations business. Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the year, with the relevant stays occurring during the peak summer travel months. The seasonal revenue impact is exacerbated with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we typically realize in closer alignment to booking volumes, and the more stable nature of our fixed costs. As a result on a consolidated basis, revenue and income are typically the lowest in the first quarter and highest in the third quarter.
The growth in our B2B segment, international operations, advertising business or a change in our product mix, among others, may also influence the typical trend of seasonality in the future.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they require that we use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance with generally accepted accounting principles in the United States ("GAAP"). Preparation of the consolidated financial statements and accompanying notes requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as revenue and expenses during the periods reported. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
There are certain critical estimates that we believe require significant judgment in the preparation of our consolidated financial statements. We consider an accounting estimate to be critical if:
•It requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the time we were making the estimate; and
•Changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations.
For additional information about our other critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2023 as well as updates in the current fiscal year provided in Note 2 - Summary of Significant Accounting Policies in the notes to the consolidated financial statements.
Occupancy and Other Taxes
Legal Proceedings.We are currently involved in four lawsuits brought by or against states, cities and counties over issues involving the payment of hotel occupancy and other taxes. We continue to defend these lawsuits vigorously. With respect to the principal claims in these matters, we believe that the statutes and/or ordinances at issue do not apply to us or the services we provide, namely the facilitation of travel planning and reservations, and, therefore, that we do not owe the taxes that are
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claimed to be owed. We believe that the statutes and ordinances at issue generally impose occupancy and other taxes on entities that own, operate or control hotels (or similar businesses) or furnish or provide hotel rooms or similar accommodations.
For additional information and other recent developments on these and other legal proceedings, see Part II, Item 1, Legal Proceedings.
We have established a reserve for the potential settlement of issues related to hotel occupancy and other tax litigation, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of $3 million and $46 million as of September 30, 2024 and December 31, 2023.
Certain jurisdictions, including without limitation the states of New York, New Jersey, North Carolina, Minnesota, Oregon, Rhode Island, Maryland, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas, Indiana, Maine, Nebraska, Vermont, Mississippi, and Virginia, the city of New York, and the District of Columbia, have enacted legislation seeking to tax online travel company services as part of sales or other taxes for hotel and/or other accommodations and/or car rental. In addition, in certain jurisdictions, we have entered into voluntary collection agreements pursuant to which we have agreed to voluntarily collect and remit taxes to state and/or local taxing jurisdictions. We are currently remitting taxes to a number of jurisdictions, including without limitation the states of New York, New Jersey, South Carolina, North Carolina, Minnesota, Georgia, Wyoming, West Virginia, Oregon, Rhode Island, Montana, Maryland, Kentucky, Maine, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas, Indiana, Nebraska, Vermont, Colorado, Mississippi, and Virginia, the city of New York and the District of Columbia, as well as certain other jurisdictions.
Pay-to-Play
Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as "pay-to-play." Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest. However, any significant pay-to-play payment or litigation loss could negatively impact our liquidity.
Other Jurisdictions. We are also in various stages of inquiry or audit with various tax authorities, some of which, including the City of Los Angeles regarding hotel occupancy taxes, may impose a pay-to-play requirement to challenge an adverse inquiry or audit result in court.
Segments
We have the following reportable segments: B2C, B2B, and trivago. Our B2C segment provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com, Hotels.com, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com and CarRentals.com. Our B2B segment fuels a wide range of travel and non-travel companies including airlines, offline travel agents, online retailers, corporate travel management and financial institutions, who leverage our leading travel technology and tap into our diverse supply to augment their offerings and market Expedia Group rates and availabilities to their travelers. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites.
Operating Metrics
Our operating results are affected by certain metrics, such as gross bookings and revenue margin, which we believe are necessary for understanding and evaluating us. Gross bookings generally represent the total retail value of transactions booked for agency and merchant transactions, recorded at the time of booking reflecting the total price due for travel by travelers, including taxes, fees and other charges, and are reduced for cancellations and refunds. Revenue margin is defined as revenue as a percentage of gross bookings.
Gross Bookings and Revenue Margin
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Gross bookings $ 27,498 $ 25,685 7 % $ 86,499 $ 82,407 5 %
Revenue margin (1)
14.8 % 15.3 % 12.1 % 12.1 %
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(1)trivago, which is comprised of a hotel metasearch business that differs from our transaction-based websites, does not have associated gross bookings or revenue margin. However, third-party revenue from trivago is included in revenue used to calculate total revenue margin.
During the three and nine months ended September 30, 2024, gross bookings increased 7% and 5%, compared to the same periods in 2023, primarily driven by lodging gross bookings due to continued strength in our hotel business. During the third quarter of 2024, we also saw a strong recovery in our air business as well as continued acceleration at Vrbo, which returned to modest growth for the quarter. The growth in the nine months ended September 30, 2024 was partially offset by softness in our Vrbo business earlier in the year. Booked room nights for our lodging business increased 9% for both the three and nine months ended September 30, 2024.
Revenue margin decreased during the three months ended September 30, 2024 compared to the same period in 2023 due to unfavorable impacts of foreign exchange and pricing actions as well as pressure from soft Vrbo bookings in the first half of 2024 translating as stays in the third quarter, which was partially offset of an uplift from advertising growth. Revenue margin remained consistent for the nine months ended September 30, 2024 as compared to the same period in 2023.
Results of Operations
Revenue
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Revenue by Segment
B2C $ 2,780 $ 2,819 (1) % $ 7,198 $ 7,155 1 %
B2B 1,178 995 18 % 3,060 2,524 21 %
trivago (Third-party revenue) 102 115 (11) % 249 273 (9) %
Total revenue $ 4,060 $ 3,929 3 % $ 10,507 $ 9,952 6 %
Revenue increased 3% and 6% for the three and nine months ended September 30, 2024, compared to the same periods in 2023, on strong growth in our B2B segment resulting from increased lodging revenue.
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Revenue by Service Type
Lodging $ 3,317 $ 3,233 3 % $ 8,407 $ 7,960 6 %
Air 104 100 6 % 330 324 2 %
Advertising and media(1)
269 240 12 % 713 616 16 %
Other 370 356 4 % 1,057 1,052 - %
Total revenue
$ 4,060 $ 3,929 3 % $ 10,507 $ 9,952 6 %
____________________________
(1)Includes third-party revenue from trivago as well as our transaction-based websites.
Lodging revenue increased 3% and 6% for the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by an increase in room nights stayed mostly in our hotel business.
Air revenue increased for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in air tickets sold. Air revenue remained consistent for the nine months ended September 30, 2024 compared to the same period in 2023.
Advertising and media revenue increased 12% and 16% for the three and nine months ended September 30, 2024, compared to the same periods in 2023, due to an increase at Expedia Group Media Solutions, partially offset by a decline in trivago revenue. All other revenue, which includes car rental, insurance, cruise and activities, increased during the three ended months September 30, 2024, compared to the same period in 2023 primarily due to an increase in car rental and insurance revenue. All other revenue for the nine months ended September 30, 2024, compared to the same period in 2023, remained consistent.
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In addition to the above segment and product revenue discussion, our revenue by business model is as follows:
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Revenue by Business Model
Merchant $ 2,805 $ 2,739 2 % $ 7,228 $ 6,833 6 %
Agency 953 918 4 % 2,469 2,408 3 %
Advertising, media and other 302 272 11 % 810 711 14 %
Total revenue $ 4,060 $ 3,929 3 % $ 10,507 $ 9,952 6 %
Merchant revenue increased for the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to an increase in merchant hotel revenue. Agency revenue increased for the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to an increase in agency lodging and air revenue. Advertising, media and other increased for the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to an increase in Expedia Media Solutions advertising revenue.
Cost of Revenue
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Direct costs $ 315 $ 328 (4) % $ 879 $ 977 (10) %
Personnel and overhead 73 84 (13) % 229 256 (10) %
Total cost of revenue $ 388 $ 412 (6) % $ 1,108 $ 1,233 (10) %
% of revenue 9.6 % 10.5 % 10.5 % 12.4 %
Cost of revenue primarily consists of direct costs to support our customer operations, including our customer support and telesales as well as fees to air ticket fulfillment vendors; credit card processing, including merchant fees, fraud and chargebacks; and other costs, primarily including data center and cloud costs to support our websites, supplier operations, destination supply, certain transactional level taxes as well as related personnel and overhead costs, including stock-based compensation.
Cost of revenue decreased $24 million and $125 million during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to lower costs from ongoing initiatives to drive transactional efficiencies.
Selling and Marketing - Direct and Indirect
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Selling and marketing - direct $ 1,855 $ 1,671 11 % $ 5,298 $ 4,737 12 %
% of revenue 45.7 % 42.5 % 50.4 % 47.6 %
Selling and marketing - indirect 197 185 7 % 580 563 3 %
% of revenue 4.9 % 4.7 % 5.5 % 5.7 %
Selling and marketing - direct costs primarily include traffic generation costs from search engines and internet portals, television and print spending, private label and affiliate program commissions, public relations and other costs. Selling and marketing - indirect costs include personnel and related overhead in our various brands and global supply organization as well as stock-based compensation costs.
Selling and marketing - direct increased $184 million and $561 million during the three and nine months ended September 30, 2024, compared to the same period in 2023, primarily driven by an increase in B2B partner commissions to support strong growth and, to a lesser extent, a ramp in marketing spend at Vrbo and international markets to drive improving
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growth and global market expansion. Selling and marketing - indirect costs increased during the three and nine months ended September 30, 2024, compared to the same period in 2023, primarily driven by an increase in average salaries.
Technology and Content
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Personnel and overhead $ 228 $ 250 (9) % $ 717 $ 735 (3) %
Other 92 90 1 % 275 266 3 %
Total technology and content $ 320 $ 340 (6) % $ 992 $ 1,001 (1) %
% of revenue 7.9 % 8.7 % 9.4 % 10.1 %
Technology and content expense includes product development and content expense, as well as information technology costs to support our infrastructure, back-office applications and overall monitoring and security of our networks, and is principally comprised of personnel and overhead, including stock-based compensation, as well as other costs including cloud expense and licensing and maintenance expense.
Technology and content expense decreased $20 million and $9 million during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to lower personnel costs in connection with previously announced cost saving initiatives, partially offset by higher stock-based compensation.
General and Administrative
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Personnel and overhead $ 193 $ 156 23 % $ 485 $ 467 4 %
Professional fees and other 36 38 (4) % 110 105 5 %
Total general and administrative $ 229 $ 194 18 % $ 595 $ 572 4 %
% of revenue 5.6 % 4.9 % 5.7 % 5.8 %
General and administrative expense consists primarily of personnel-related costs, including our executive leadership, finance, legal and human resource functions and related stock-based compensation as well as fees for external professional services.
General and administrative expense increased $35 million and $23 million during the three and nine months ended September 30, 2024 as compared to the same periods in 2023 due to acceleration of approximately $51 million of stock-compensation expense relate to the recent departure of our Vice Chairman, partially offset lower personnel costs in connection with previously announced cost saving initiatives.
Depreciation and Amortization
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Depreciation $ 197 $ 194 2 % $ 582 $ 555 5 %
Amortization of intangible assets 14 14 (4) % 44 44 - %
Total depreciation and amortization $ 211 $ 208 1 % $ 626 $ 599 4 %
Depreciation increased $3 million and $27 million during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily as a result of increased depreciation related to capitalized website development costs. Amortization of intangible assets remained consistent during the three and nine months ended September 30, 2024 as compared to the same periods in 2023.
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Impairment of Goodwill and Intangible Assets
During the three and nine months ended September 30, 2023, we recognized a goodwill impairment charge of $297 million related to our trivago segment.
During the three and nine months ended September 30, 2024 and September 30, 2023, we recognized intangible impairment charges of $33 million and $15 million related to an indefinite-lived trade name within our trivago segment.
See Note 3 - Fair Value Measurements in the notes to the consolidated financial statements for further information.
Legal Reserves, Occupancy Tax and Other
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Legal reserves, occupancy tax and other $ 59 $ - N/A $ 100 6 N/A
% of revenue 1.4 % - % 0.9 % 0.1 %
Legal reserves, occupancy tax and other primarily consists of increases in our reserves for court decisions and the potential and final settlement of issues related to hotel occupancy and other taxes, expenses recognized related to monies paid in advance of occupancy and other tax proceedings ("pay-to-play") as well as certain other items and legal reserves.
Legal reserves, occupancy tax and other for the three months ended September 30, 2024, primarily included $92 million charge related to an Italian VAT settlement reserve, partially offset by net reductions to our reserve of $33 million related to hotel occupancy and other taxes due to the favorable resolution of a tax related case. Legal reserves, occupancy tax and other for the nine months ended September 30, 2024 also included a $30 million charge related to digital service taxes for fiscal years 2022 and 2023 retroactively enacted by Canada in June 2024 and our donation of $20 million as part of a public-private partnership project to revitalize public parks along the Elliot Bay waterfront in Seattle, partially offset by an additional net reduction of to our reserve of $9 million for the favorable resolution of another tax related case. During the nine months ended September 30, 2023, the charges primarily included changes to our reserve related to other taxes.
Restructure and Related Reorganization Charges
In February 2024, we committed to restructuring actions to recalibrate resources as most of the Company's organizational and technological transformation is now completed, which have resulted in headcount reductions. As a result, we recognized $6 million and $72 million in restructuring and related reorganization charges during the three and nine months ended September 30, 2024, which were predominately related to employee severance, stock-based compensation and benefits costs. Based on current plans which are subject to change, we expect total reorganization charges in the remainder of 2024 to be in the range of approximately $5 million to $10 million. These costs could be higher or lower should we make additional decisions in future periods that impact our reorganization efforts.
Operating Income
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Operating income $ 762 $ 607 26 % $ 1,103 $ 929 19 %
% of revenue 18.8 % 15.5 % 10.5 % 9.3 %
During the three and nine months ended September 30, 2024, the increase in operating income in the current year periods was primarily due to lower impairment charges in the current periods, partially offset by the legal reserve, occupancy and other charges as well as the restructuring charges discussed above.
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Adjusted EBITDA by Segment
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
B2C $ 1,028 $ 1,056 (3) % $ 1,897 $ 1,857 2 %
B2B 338 266 27 % 773 605 28 %
trivago 14 18 (17) % - 51 N/A
Unallocated overhead costs (Corporate) (130) (124) 6 % (379) (365) 4 %
Total Adjusted EBITDA (1)
$ 1,250 $ 1,216 3 % $ 2,291 $ 2,148 7 %
____________________________
(1) Adjusted EBITDA is a non-GAAP measure. See "Definition and Reconciliation of Adjusted EBITDA" below for more information.
Adjusted EBITDA is our primary segment operating metric. See Note 10 - Segment Information in the notes to the consolidated financial statements for additional information on intersegment transactions, unallocated overhead costs and for a reconciliation of Adjusted EBITDA by segment to net income (loss) attributable to Expedia Group, Inc. for the periods presented above.
Our B2C segment Adjusted EBITDA decreased slightly during the three months ended September 30, 2024, compared to the same period in 2023, due to slight revenue declines as well as an increase in marketing spend. Our B2C segment Adjusted EBITDA increased slightly during the nine months ended September 30, 2024, compared to the same period in 2023, as a result of revenue growth. Our B2B segment experienced an improvement in Adjusted EBITDA during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily as a result of strong revenue growth. Our trivago segment Adjusted EBITDA decreased during the three and nine months ended September 30, 2024, compared to the same periods in 2023, as a result of revenue declines resulting from headwinds in its performance marketing channels. The quarter-to-date period was impacted by lower marketing costs while the year-to-date period was impacted by an increase in marketing costs.
Interest Income and Expense
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Interest income $ 67 $ 56 21 % $ 185 $ 162 15 %
Interest expense (61) (62) - % (184) (184) - %
Interest income increased for the three and nine months ended September 30, 2024, compared to the same periods in 2023, as a result of higher rates of return. Interest expense remained consistent for the three and nine months ended September 30, 2024, compared to the same periods in 2023.
Other, Net
Other, net is comprised of the following:
Three months ended September 30, Nine months ended September 30,
2024 2023 2024 2023
($ in millions)
Foreign exchange rate gains (losses), net $ 32 $ (31) $ (29) $ (79)
Gains (losses) on minority equity investments, net 74 (127) 121 (73)
TripAdvisor tax indemnification adjustment - - 6 67
Gain on sale of businesses and investments, net 2 - 5 24
Other (2) 1 - 1
Total other, net $ 106 $ (157) $ 103 $ (60)
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During the nine months ended September 30, 2023, we recognized a $67 million gain, which together with amounts recorded in a prior period, represented the estimate of an indemnification reimbursement due to Expedia Group from TripAdvisor. During the nine months ended September 30, 2024, we recognized a $6 million gain related to an indemnification receivable for additional interest due to the IRS. See "Provision for Income Taxes" below for the corresponding charge to income tax expense.
Provision for Income Taxes
Three months ended September 30, Nine months ended September 30,
2024 2023 % Change 2024 2023 % Change
($ in millions) ($ in millions)
Provision for income taxes $ 190 $ 139 37 % $ 284 $ 295 (4) %
Effective tax rate 21.7 % 31.2 % 23.5 % 34.8 %
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate. We record any changes affecting the estimated annual tax rate in the interim period in which the change occurs, including discrete items.
For the three months ended September 30, 2024, the effective tax rate was 21.7%, compared to 31.2% for the three months ended September 30, 2023. The change in the effective tax rate was primarily due to a nondeductible goodwill impairment and nondeductible mark-to-market charges recorded in the prior year period.
For the nine months ended September 30, 2024, the effective tax rate was 23.5%, compared to 34.8% for the nine months ended September 30, 2023. The change in the effective tax rate was due to discrete tax effects of the TripAdvisor audit assessment recorded in the prior year period, as discussed further in Note 8 - Income Taxes in the notes to the consolidated financial statements.
We are subject to taxation in the United States and foreign jurisdictions. Our income tax filings are regularly examined by federal, state, and foreign tax authorities. For tax years 2011 to 2013 and 2014 to 2016, the IRS issued final adjustments related to transfer pricing with our foreign subsidiaries. The 2011 to 2013 adjustments would result in federal income tax of approximately $244 million, subject to interest. The 2014 to 2016 adjustments would result in federal income tax of approximately $431 million, subject to interest. We do not agree with these adjustments and will continue to vigorously defend our position through administrative procedures. We are also under examination by the IRS for tax years 2017 to 2020.
In December 2021, the OECD released model rules introducing a 15% global minimum tax rate for large multinational corporations ("Pillar Two"). Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We considered the applicable tax laws in relevant jurisdictions and concluded there is no material impact to our tax provision for the nine months ended September 30, 2024. The Company will continue to evaluate the potential impact of Pillar Two on future reporting periods.
Definition and Reconciliation of Adjusted EBITDA
We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP"). Adjusted EBITDA is among the primary metrics by which management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the same set of tools that management uses to analyze our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA has certain limitations in that it does not take into account the impact of certain expenses to our consolidated statements of operations. We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing the most directly comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. Adjusted EBITDA also excludes certain items related to transactional tax matters, which may ultimately be settled in cash, and we urge investors to review the detailed disclosure regarding these matters included above, in the Legal Proceedings section, as well as the notes to the financial statements. The non-GAAP financial measure used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Adjusted EBITDA is defined as net income (loss) attributable to Expedia Group, Inc. adjusted for (1) net income (loss) attributable to non-controlling interests; (2) provision for income taxes; (3) total other expenses, net; (4) stock-based compensation expense, including compensation expense related to certain subsidiary equity plans; (5) acquisition-related impacts, including (i) amortization of intangible assets and goodwill and intangible asset impairment, (ii) gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, and (iii) upfront consideration paid to settle employee compensation plans of the acquiree, if any; (6) certain other items, including restructuring; (7) items included in
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legal reserves, occupancy tax and other; (8) that portion of gains (losses) on revenue hedging activities that are included in other, net that relate to revenue recognized in the period; and (9) depreciation.
The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing of these items is unpredictable, not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future on-going performance as this measure allows a more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. In addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business and allows investors to gain an understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made and debt is serviced.
The reconciliation of net income attributable to Expedia Group, Inc. to Adjusted EBITDA is as follows:
Three months ended September 30, Nine months ended September 30,
2024 2023 2024 2023
(In millions)
Net income attributable to Expedia Group, Inc. $ 684 $ 425 $ 935 $ 665
Net income (loss) attributable to non-controlling interests - (120) (12) (113)
Provision for income taxes 190 139 284 295
Total other (income) expense, net (112) 163 (104) 82
Operating income 762 607 1,103 929
Gain (loss) on revenue hedges related to revenue recognized 32 (16) - (12)
Restructuring and related reorganization charges, excluding stock-based compensation 6 - 64 -
Legal reserves, occupancy tax and other 59 - 100 6
Stock-based compensation 147 105 365 314
Depreciation and amortization 211 208 626 599
Impairment of goodwill - 297 - 297
Impairment of intangible assets 33 15 33 15
Adjusted EBITDA $ 1,250 $ 1,216 $ 2,291 $ 2,148
Financial Position, Liquidity and Capital Resources
Our principal sources of liquidity are typically cash flows generated from operations, cash available under our credit facility as well as our cash and cash equivalents and short-term investment balances, which were $4.9 billion and $4.3 billion at September 30, 2024 and December 31, 2023. As of September 30, 2024, the total cash and cash equivalents and short-term investments held outside the United States was $633 million ($512 million in wholly-owned foreign subsidiaries and $121 million in majority-owned subsidiaries). Our revolving credit facility with aggregate commitments of $2.5 billion was essentially untapped at September 30, 2024.
Our credit ratings are periodically reviewed by rating agencies. As of September 30, 2024, Moody's rating was Baa2 with an outlook of "stable," S&P's rating was BBB with an outlook of "stable" and Fitch's rating was BBB- with an outlook of "positive." Changes in our operating results, cash flows, financial position, capital structure, financial policy or capital allocations to share repurchase, dividends, investments and acquisitions could impact the ratings assigned by the various rating agencies. Should our credit ratings be adjusted downward, we may incur higher costs to borrow and/or limited access to capital markets and interest rates on our 6.25% senior notes, 4.625% senior notes as well as our 2.95% senior notes will increase, which could have a material impact on our financial condition and results of operations.
As of September 30, 2024, we were in compliance with the covenants and conditions in our revolving credit facility and outstanding debt as detailed in Note 4 - Debt in the notes to the consolidated financial statements.
Under the merchant model, we receive cash from travelers at the time of booking and we record these amounts on our consolidated balance sheets as deferred merchant bookings. We pay our airline suppliers related to these merchant model bookings generally within a few weeks after completing the transaction. For most other merchant bookings, which is primarily our merchant lodging business, we generally pay after the travelers' use and, in some cases, subsequent billing from the hotel
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suppliers. Therefore, generally we receive cash from the traveler prior to paying our supplier, and this operating cycle represents a working capital source of cash to us. Typically, the seasonal fluctuations in our merchant hotel bookings have affected the timing of our annual cash flows. Generally, during the first half of the year, hotel bookings have traditionally exceeded stays, resulting in much higher cash flow related to working capital. During the second half of the year, this pattern typically reverses and cash flows are typically negative.
Our cash flows are as follows:
Nine months ended September 30,
2024 2023 $ Change
(In millions)
Cash provided by (used in):
Operating activities $ 2,887 $ 2,928 $ (41)
Investing activities (901) (635) (266)
Financing activities (1,590) (1,599) 9
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents (11) (53) 42
For the nine months ended September 30, 2024, net cash provided by operating activities remained consistent with net cash provided by operating activities in the prior year period.
For the nine months ended September 30, 2024, we had net cash used in investing activities of $901 million compared to $635 million in the prior year period. The change was primarily due to net purchases of investments in the current period compared to sales of investments in the prior year period, partially offset by lower current period capital expenditures.
For the nine months ended September 30, 2024, net cash used in financing activities primarily included $1.6 billion of cash paid to acquire shares, including the repurchased shares under the authorization discussed below and for treasury stock activity related to the vesting of equity instruments, partially offset by $77 million of proceeds from the exercise of options and employee stock purchase plans. For the nine months ended September 30, 2023, net cash used in financing activities primarily included $1.7 billion of cash paid to acquire shares, including the repurchased shares under repurchase programs and for treasury stock activity related to the vesting of equity instruments, partially offset by $53 million of proceeds from the exercise of options and employee stock purchase plans.
In October 2023, the Executive Committee of the Board of Directors, pursuant to a delegation of authority from the Board, authorized an additional program to repurchase up to $5 billion of our common stock ("2023 Share Repurchase Program"). During the nine months ended September 30, 2024, we repurchased, through open market transactions, 11.2 million shares under 2023 Share Repurchase Program for a total cost of approximately $1.5 billion, excluding transaction costs and excise tax due under the Inflation Reduction Act of 2022. As of September 30, 2024, $3.4 billion remain authorized for repurchase under the 2023 Share Repurchase Program. Our 2023 Share Repurchase Programs does not have fixed expiration dates and does not obligate the Company to acquire any specific number of shares. Under the program, shares may be repurchased in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be subject to the discretion of the Company and depend on a variety of factors, including the market price of Expedia Group's common stock, general market and economic conditions, regulatory requirements and other business considerations.
Foreign exchange rate changes resulted in a decrease of our cash and restricted cash balances denominated in foreign currency during the nine months ended September 30, 2024 of $11 million compared to $53 million decrease in the prior year period reflecting higher net depreciation in foreign currencies relative to the U.S. dollar in the prior year period.
Other than discussed above, there have been no material changes outside the normal course of business to our contractual obligations and commercial commitments since December 31, 2023.
In our opinion, our liquidity position provides sufficient capital resources to meet our foreseeable cash needs. There can be no assurance, however, that the cost or availability of future borrowings, including refinancings, if any, will be available on terms acceptable to us.
Summarized Financial Information for Guarantors and the Issuer of Guaranteed Securities
Summarized financial information of Expedia Group, Inc. (the "Parent") and our subsidiaries that are guarantors of our debt facility and instruments (the "Guarantor Subsidiaries") is shown below on a combined basis as the "Obligor Group." The debt facility and instruments are guaranteed by certain of our wholly-owned domestic subsidiaries and rank equally in right of
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payment with all of our existing and future unsecured and unsubordinated obligations. The guarantees are full, unconditional, joint and several with the exception of certain customary automatic subsidiary release provisions. In this summarized financial information of the Obligor Group, all intercompany balances and transactions between the Parent and Guarantor Subsidiaries have been eliminated and all information excludes subsidiaries that are not issuers or guarantors of our debt facility and instruments, including earnings from and investments in these entities.
September 30, 2024 December 31, 2023
(In millions)
Combined Balance Sheets Information:
Current Assets $ 8,849 $ 7,408
Non-Current Assets 10,573 10,399
Current Liabilities(1)
15,218 11,949
Non-Current Liabilities 5,778 6,792
Nine Months Ended
September 30, 2024 		Year Ended December 31, 2022
Combined Statements of Operations Information:
Revenue $ 8,100 $ 10,122
Operating income(2)
754 714
Net income 568 566
Net income attributable to Obligors 580 675
____________________________
(1)Current liabilities include intercompany payables with non-guarantors of $1.2 billion as of September 30, 2024 and $804 million as of December 31, 2023.
(2)Operating income includes net intercompany income with non-guarantors of $471 million for the nine months ended September 30, 2024 and $152 million for the year ended December 31, 2023.
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Part I. Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
There have been no material changes in our market risk during the three and nine months ended September 30, 2024. For additional information, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.
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Part I. Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures.
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, including our Chairman and Senior Executive, Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chairman and Senior Executive, Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
Changes in internal control over financial reporting.
There were no changes to our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II. Item 1. Legal Proceedings
In the ordinary course of business, Expedia Group and its subsidiaries are parties to legal proceedings and claims involving property, tax, personal injury, contract, alleged infringement of third-party intellectual property rights and other claims. A discussion of certain legal proceedings can be found in the section titled "Legal Proceedings," of our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the quarters ended June 30, 2024 and March 31, 2024. The following are developments regarding, as applicable, such legal proceedings and/or new legal proceedings:
Litigation Relating to Occupancy and Other Taxes
State of Louisiana/City of New Orleans Litigation. On October 8, 2024, the Louisiana Supreme Court denied plaintiffs' writ applications, thereby ending the matter.
Clark County, Nevada Litigation. The United States Ninth Circuit Court of Appeals has scheduled argument on the appeal for December 8, 2024.
Other Legal Proceedings
Israeli Putative Class Action Lawsuit (Silis). On May 8, 2024,this case was closed by the court, thereby ending the matter.
Helms Burton Litigation. On October 31, 2024, the court granted defendants' motion for summary judgment on all claims in the Trinidad matter.
Paris City Hall Litigation. On October 22, 2024, the court issued an opinion affirming the trial court's dismissal of all claims against Homeaway UK.
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Part II. Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. These are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In October 2023, the Executive Committee of the Board of Directors, pursuant to a delegation of authority from the Board, authorized an additional program to repurchase up to $5 billion of our common stock. A summary of the repurchase activity for the third quarter of 2024 is as follows:
Period Total Number of
Shares Purchased 		Average Price
Paid Per Share 		Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs 		Maximum
Dollar Value of
Shares that
May Yet Be
Purchased
Under Plans or
Programs
(In thousands, expect per share data)
July 1-31, 2024 801 $ 129.08 801 $ 3,672,799
August 1-31, 2024 1,416 $ 131.26 1,416 3,487,019
September 1-30, 2024 849 $ 138.22 849 3,369,632
Total 3,066 3,066
Part II. Item 5. Other Information
Rule 10b5-1 Plan Elections
During the quarter ended September 30, 2024, none of our directors or executive officers adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" as such terms are defined under Item 408 of Regulation S-K.
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Part II. Item 6. Exhibits
The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.
Exhibit
No. 		Exhibit Description Filed
Herewith 		Incorporated by Reference
Form SEC File No. Exhibit Filing Date
22
List of Guarantor Subsidiaries of Expedia Group, Inc.
X
31.1
Certification of the Chairman and Senior Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.3
Certification of the Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1
Certification of the Chairman and Senior Executive pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X
32.2
Certification of the Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X
32.3
Certification of the Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X
101 The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Changes in Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. X
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
November 7, 2024 Expedia Group, Inc.
By: /s/ Julie Whalen
Julie Whalen
Chief Financial Officer
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