Q3 2011 Earnings Call
October 27, 2011 5:00 pm ET
Alan Pickerill - Director, Investor Relations
Mark Okerstrom - Senior Vice President of Corporate Development
Dara Khosrowshahi - Chief Executive Officer, President, Director, Member of Preferred Stock Subcommittee and Member of Executive Committee
Brian Nowak - Nomura Securities Co. Ltd., Research Division
Herman Leung - Susquehanna Financial Group, LLLP, Research Division
Kevin Crissey - UBS Investment Bank, Research Division
Stephen Ju - Crédit Suisse AG, Research Division
Mark S. Mahaney - Citigroup Inc, Research Division
Justin Post - BofA Merrill Lynch, Research Division
Ross Sandler - RBC Capital Markets, LLC, Research Division
Scott H. Kessler - S&P Equity Research
Naved Khan - Jefferies & Company, Inc., Research Division
Tom White - Macquarie Research
Previous Statements by EXPE
» Expedia's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Expedia's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Expedia's CEO Discusses Q4 2010 Results - Earnings Call Transcript
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Expedia Inc. Third Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, October 27, 2011. And I would now like to turn the conference over to Alan Pickerill, Vice President of Investor Relations. Please go ahead.
Thank you. Good afternoon, and welcome to Expedia's Financial Results Conference Call for the Third Quarter Ended September 30, 2011. I'm pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President; and Mark Okerstrom, our CFO.
The following discussion, including responses to your questions, reflects management's views as of today, October 27, 2011, only. We do not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to today's press release and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements.
You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today on our earnings release, which is posted on the company's IR website at expediainc.com/ir. I encourage you to periodically visit our Investor Relations site for important content, including today's earnings release.
Finally, unless otherwise stated, all references to cost of revenue, selling and marketing expense, general and administrative expense, and technology and content expense, excludes stock-based compensation. And all comparisons on this call will be against our results for the comparable period of 2010. And with that, let me turn the call over to Dara.
Thanks, Alan. First, I'd like to take a brief moment to welcome Mark Okerstrom as our newly appointed Chief Financial Officer. Although Mark has only been in the role for a matter of weeks, he's been with the company for 5 years and has been a key member of our leadership team. His knowledge of both the industry and our company will prove invaluable in this role. With that, let's jump into the call.
Our third quarter was a solid quarter, with a number of key pieces of good news along with a handful of challenges. Overall, the revenue growth of 15% was quite healthy, and we saw solid top line results across all of our brands with the exception of Expedia, which, as we mentioned last quarter, is in the middle of a major transition. Excluding the impact of the $12 million expense to increase our occupancy tax settlement reserves, operating income before amortization grew 12% for the quarter, right in line with our forecast. Including this item, OIBA grew 8%.
Adjusted earnings per share growth this year remains healthy at 13% for the quarter and 15% year-to-date. Our brand results continue to be A Tale of Two Cities. Revenue for Expedia brand was down 1% year-over-year for the quarter, while all of our other businesses grew at an impressive combined rate of 29%, demonstrating the real returns that we've created as the result of the investments that we made in those businesses. The transition of the Expedia platform remains a key initiative. I'm pleased to report that our project are on track and the playbook is being executed. We've now largely completed the worldwide rollout of the end-to-end hotel product on the new Expedia platform and we've seen steadily improving conversion rates for our stand-alone hotel product since the beginning of the year. Unfortunately, the financial benefits of these improvement has been largely offset by decreases in our air and package volumes. Our focus is now on getting our air and same path [ph] ready for migration early next year, building on our packages platform for 2012 release and iterating on a fast push basis for improvements to our booking results.
We are in build and execution mode and the experiences in our other businesses leave us confident that the future payout is going to come. In terms of international expansion, we've officially launched our joint venture with AirAsia at the beginning of the quarter, and are off to a strong start. The team is aggressively pushing forward and the exclusive areas of content is now available on 9 sites in the APAC region. We're proud to be partnering with AirAsia and we've got the right team in place, and we continue to be quite excited about this approach. And remember, the joint venture is exclusively with our Expedia brand, we also have Hotels.com, eLong and TripAdvisor with their completely separate efforts in the Asia Pacific region. So our overall approach to the region is quite broad. They require a lot of hard work and solid execution to ensure success in this fast-growing market.