Expedia Group Inc (NASDAQ: EXPE) stock surged over 9.5% on 14th Feb, 2020 (As of 10:25 am GMT-5; Source: Google finance) after the company expects between $300 million and $500 million in run-rate cost savings across its business. Total gross bookings rose 6% (foreign exchange impact was negligible) for the fourth quarter of FY 19 driven by growth in Expedia Partner Solutions, which includes the benefit from enterprise deals launched in late 2018, and Hotels.com. Domestic gross bookings grew 7% and international gross bookings grew 4%.
The slowdown in gross bookings is mainly due to the air business as the company started to comp the enterprise deals at Expedia Partner Solutions which drives significant air volume for us. Lodging revenue grew 9% in Q4 on 11% stayed room night growth and a 2% decrease in revenue per room night, mainly due to growth in the loyalty program. Domestic room night growth remained strong, increased to 10% as the company continued to gain share in the U.S. on the back of strong trends and direct channels. The majority of the increase in the cost of revenue (10%) is related to the increase in cloud costs, inorganic impact of bodybuilding.com and processing fees related to the ramp-up in Vrbo’s transition to the Expedia payment platform. Air revenue fell 8% in the fourth quarter of 2019 driven by a 9% decrease in revenue per ticket, which is mainly due to a shift in product mix and changes in classification of certain fees.
Free cash flow increased 46% for full-year 2019. Normalized for Vrbo’s payments transition, free cash flow grew almost in line with adjusted EBITDA to nearly $1.1 billion. The company’s Net cash provided by operating activities and free cash flow grew 40% and 46%, respectively for the full year 2019 to $2.8 billion and $1.6 billion, respectively.
EXPE in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.16, missing the analysts’ estimates for the adjusted earnings per share of $1.19, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 8 percent to $2.63 billion in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $2.76 billion.
Additionally, from early December through early February, the company had repurchased 5.8 million shares for $634 million. For full year 2019, the company had repurchased 5.6 million shares for $683 million
Meanwhile, Expedia did not provide 2020 guidance, but said its EBITDA growth will be “in the double digits” for this year.