Online travel agency Expedia’s first-quarter net earnings rose to $34.8 million, or 11 cents per share, from $23.3 million, or six cents per share, a year earlier.

Published: 09 May 2007

Online travel agency Expedia’s first-quarter net earnings rose to $34.8 million, or 11 cents per share, from $23.3 million, or six cents per share, a year earlier.

Gross bookings increased eight percent for the first quarter of 2007 compared with the first quarter of 2006. North America bookings increased one percent, Europe bookings increased 32 percent (22 percent excluding the impact of foreign exchange), and other bookings increased 23 percent.

Revenue increased 11 percent for the first quarter, primarily driven by increased worldwide merchant hotel revenue and advertising revenue (net of inter-company transactions), partially offset by a decline in North America air revenue. North America revenue increased six percent, Europe revenue increased 29 percent (20 percent excluding the impact of foreign exchange), and other revenue increased 28 percent.

Gross profit for the first quarter of 2007 was $429 million, an increase of 15 percent compared with the first quarter of 2006 primarily due to increased revenue and a 212 basis point increase in gross margin to 77.97 percent. OIBA for the first quarter increased 18% to $104 million, driven in part by higher revenue.

“From the very difficult prior year, and a first quarter this year reflecting growth, we begin 2007 with renewed confidence in Expedia’s operations and business model,” said Barry Diller, Expedia, Inc.’s Chairman and Senior Executive.

“With accelerating transaction growth, a 32 percent increase in European bookings, 11 percent revenue growth and the very beginning echoes of resurgence at Expedia.com we are seeing the early results of the reinvestments and reorganizations that made last year so challenging. We can’t yet say what the next quarter or year may bring, but clear progress is being made both under the hood of daily work and structurally, with reduced share counts and a focus on managing for free cash flow over the long term,” said Diller.

Marianne Wolk, an analyst at Susquehanna, according to Reuters, said, “It’s just that expenses were higher than expected, and they missed consensus on the bottom line.” The company’s operating expenses were mostly higher, with the biggest increase in selling and marketing costs, which jumped 10.6 percent.