Expedia Group, Inc. (EXPE Quick QuoteEXPE - Free Report) reported adjusted earnings of $1.26 per share for fourth-quarter 2022, up 19% on a year-over-year basis. The figure missed the Zacks Consensus Estimate by 31.9%.

Revenues of $2.62 billion rose 15% year over year. Further, the figure lagged the Zacks Consensus Estimate of $2.68 billion.

Year-over-year revenue growth was driven by a strong performance across all the business lines, owing to solid travel demand during the reported quarter.

However, Expedia bore the brunt of severe weather conditions during the reported quarter.

Expedia’s gross bookings were $20.51 billion, which increased 17% year over year. Strong momentum in lodging and air bookings contributed well. Also, strength in ‘booked room nights’ and ‘stayed room nights’, which grew by 19% each, was a positive.

We note that an uncertain macroeconomic environment is expected to prevail.

Expedia has lost 40.4% compared with the industry’s decline of 30.2%.

Nevertheless, EXPE’s growing efforts toward strengthening its products and technology offerings for customers remain noteworthy.

Revenues by Segment

Retail: Expedia generated $1.87 billion of revenues (71.6% of the total revenues) from the segment, rising 8% year over year.

B2B: The segment yielded revenues of $676 million (25.8% of the total revenues), up 41% from the year-ago quarter’s level.

trivago: Revenues from the segment totaled $106 million (4% of the total revenues), up 7% year over year.

Revenues by Business Model

The Merchant model generated revenues of $1.72 billion (65.9% of the total revenues), up 17% year over year. Merchant’s gross bookings were $11.04 billion, up 21% from the prior-year quarter’s figure.

The Agency division generated revenues of $685 million (26.2% of the total revenues), an improvement of 12% from the prior-year quarter’s tally. Agency’s gross bookings were $9.5 billion, up 14% year over year.

Advertising & Media and Other generated $208 million of revenues (7.9% of the top line), increasing 10% from the year-ago quarter’s level. This can primarily be attributed to the strong performance of Expedia Media Solutions.

Revenues by Geography

Expedia generated $1.72 billion of revenues (65.6% of the total revenues) from U.S. points of sale, up 4% from the prior-year quarter’s level.

Revenues generated by non-U.S. points of sale totaled $901 million (34.4% of the total revenues), up 44% on a year-over-year basis.

Revenues by Product Line

Lodging revenues were $2.01 billion, accounting for 77% of the total revenues. EXPE witnessed 18% growth in Lodging revenues owing to the solid momentum in stayed room nights, which grew 19%. Also, 19% growth in booked room nights contributed well.

Air revenues were $93 million, representing 3% of the total revenues. EXPE witnessed a 44% rise in Air revenues, owing to a 47% growth in revenue per ticket and a 22% rise in airfare.

Operating Details

Adjusted EBITDA was $449 million in the reported quarter, down 6% from the year-ago quarter’s level.

Adjusted selling and marketing expenses were $1.36 billion, up 32% year over year. As a percentage of revenues, the figure expanded 690 basis points (bps) year over year.

Adjusted general and administrative expenses were $142 million, up 6% year over year. The figure contracted 50 bps year over year as a percentage of revenues.

Adjusted technology and content expenses were $288 million, up 17% from the year-ago quarter’s level. The figure expanded 20 bps from the year-ago quarter’s figure as a percentage of revenues.

EXPE reported a fourth-quarter operating income of $128 million, down 21% year over year. The operating margin contracted 220 bps year over year to 4.9% in the reported quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2022, cash and cash equivalents were $4.1 billion, down from $4.6 billion as of Sep 30, 2022. Short-term investments were $48 million compared with $49 million at the end of the previous quarter.

Long-term debt was $6.24 billion at the end of the fourth quarter compared with $6.23 billion at the end of the third quarter.

Expedia used $182 million of cash in operations during the quarter under review, down from $997 million in the previous quarter.

Free cash flow was $359 million in the fourth quarter.

Zacks Rank & Other Stocks to Consider

Currently, Expedia sports a Zacks Rank #1 (Strong Buy).

Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Agilent Technologies (A Quick QuoteA - Free Report) , Arista Networks (ANET Quick QuoteANET - Free Report) and Endava (DAVA Quick QuoteDAVA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies is set to report its first-quarter fiscal 2023 results on Feb 28. The Zacks Consensus Estimate for Agilent’s earnings is pegged at $1.31 per share, suggesting an increase of 8.3% from the prior-year period’s reported figure. Agilent has gained 9% in the past year.

Arista Networks is scheduled to release its fourth-quarter 2022 results on Feb 13. The Zacks Consensus Estimate for ANET’s earnings is pegged at $1.21 per share, suggesting an increase of 47.6% from the prior-year quarter’s reported figure. ANET has gained 7.4% in the past year.

Endava is scheduled to release its second-quarter fiscal 2023 results on Feb 14. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 68 cents per share, suggesting an increase of 7.9% from the prior-year quarter’s reported figure. DAVA has lost 18.5% in the past year.