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Expedia (Nasdaq: EXPE) has served up the most solid proof to date that online travel has almost completely recovered from September 11th, beating expectations and registering a profit in the first quarter on revenue that doubled from a year ago.
Bellevue, Washington-based Expedia earned US$5.7 million in the first three months of this year, compared with a loss of $17.6 million in the first quarter of 2001. Revenue more than doubled from the year-ago period to $116 million and was up 42 percent over the fourth quarter.
Total bookings for the quarter came in at $1.1 billion, with so-called merchant revenue, largely from vacation packages cobbled together from third-party sources, up more than 300 percent from 2001 levels. In fact, merchant revenue topped that generated by direct sales for the first time.
Merry Merchants
For instance, Expedia said it booked 2 million hotel nights in the quarter, 1.6 million of which came through merchant accounts.
"These numbers are the result of consumers and suppliers embracing the travel marketplace we have built at Expedia," company CEO Richard Barton said. "This quarter we saw our dynamic packaging business really hit its stride."
The company's shares set new 52-week highs recently but slid 5 percent Tuesday ahead of the earnings release. In early trading Wednesday, the stock rebounded by 9.5 percent to $77.40. On the strength of the earnings report and outlook, Credit Suisse First Boston raised its target price on the stock to $90.
Acquisitions Aboard
Expedia said its results included less than a month's worth of revenue and bookings from Classic Custom Vacations, which it acquired in January for $52 million. But the acquisition contributed $18 million in bookings and $5.6 million in revenue in just 22 days, according to the company.
"This financial performance reflects record results across all significant line items," Expedia chief financial officer Gregory S. Stanger said. "We continued to diversify our business model, with merchant revenues exceeding agency revenues for the first time."
Expedia also believes it will far exceed the outlook it forecast in January for fiscal 2002. Revenue could be as much as $100 million higher than the $450 million projected earlier, the company said, while operating profit could be as much as $59 million over the original estimate of $80 million.
Comeback Kids
Analysts have been tracking the recovery of online travel since the disastrous days following the September 11th terrorist attacks, when the sector scrambled to lay off workers in response to diving demand.
But that trend quickly reversed itself. By early 2002, traffic to travel sites was ahead of pre-September levels.
"The sector is going to continue to grow and do so much faster than travel overall," Nielsen//NetRatings analyst Lisa Strand told the E-Commerce Times. "People are realizing the Web is a great place to research and book their travel, and those who do it once appear to be coming back again."
At the same time, Expedia has solidified its lead over archrival Travelocity and other sites, drawing 11.6 million visitors in March compared with 10.2 million for Travelocity.
Good News Travels
The company's strong earnings add it to a growing list of top performers in the first quarter.
Amazon (Nasdaq: AMZN)beat estimates when it reported financial results late Tuesday, while eBay (Nasdaq: EBAY) and Yahoo! (Nasdaq: YHOO) both managed to outperform expectations in recent weeks.
Smaller e-tailers also have reported strong results. For example, Drugstore.com said
Tuesday that it had trimmed its loss substantially, and FTD.com reported another
profitable quarter.
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