Liberty Interactive Corporation Reports Third Quarter 2016 Financial Results

Liberty Interactive Corporation ("Liberty Interactive") (Nasdaq: QVCA, QVCB, LVNTA, LVNTB) today reported third quarter 2016 results. Highlights include (1):

Attributed to QVC Group
  • QVC consolidated revenue down 3% to $1.9 billion
  • Local currency sales gains in all consolidated international markets
  • QVC consolidated mobile penetration was 59% of QVC.com orders, a 603 basis point increase
    • QVC US mobile penetration was 58% of QVC.com orders, a 578 basis point increase
  • zulily revenue grew 14% to $359 million and operating loss was $52 million, primarily as a result of approximately $60 million of amortization of intangible assets recognized in purchase accounting
    • zulily adjusted OIBDA (2) grew 20% to $18 million
  • From August 1, 2016 through October 31, 2016, repurchased 9.2 million QVCA shares at an average price per share of $20.50 and a total cost of $188 million

Attributed to Liberty Ventures Group
  • Completed the split-off ("Split-off") of Liberty Expedia Holdings ("Expedia Holdings") (Nasdaq: LEXEA, LEXEB) on November 4, 2016
    • Expedia Holdings distributed $300 million to Liberty Interactive in connection with Split-off, which was attributed to Liberty Ventures Group

"QVC did well internationally and just launched Beauty iQ, a new multiplatform network dedicated to beauty, while zulily again posted impressive results," said Greg Maffei, Liberty Interactive President and CEO. "At Liberty Ventures, we completed the tax-free split-off of Expedia Holdings, resulting in a distribution of $300 million that was attributed to Ventures."

QVC GROUP - For the quarter, QVC Group's revenue increased 15% to $2.3 billion, operating income decreased 37% to $167 million, adjusted OIBDA decreased 4% to $406 million, net income decreased 60% to $61 million, and adjusted net income (3) decreased 27% to $148 million. QVC Group's reported GAAP results include the zulily acquisition beginning in the fourth quarter of 2015 (see the "zulily" section below for a further discussion of the impact of the acquisition).

Subsequent to quarter end, on October 5, 2016, Liberty Interactive LLC ("LI LLC") paid $345 million to holders of substantially all of its 1% Exchangeable Senior Debentures due 2043 (the "1% Exchangeables") that chose to exercise a purchase option requiring LI LLC to repurchase the 1% Exchangeables for a price equal to the adjusted principal amount per debenture plus accrued and unpaid interest. LI LLC funded this payment by drawing on the QVC bank credit facility.

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