A month has gone by since the last earnings report for Expedia (EXPE Quick QuoteEXPE - Free Report) . Shares have lost about 14% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Expedia due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Expedia Reports Loss in Q1

Expedia Group reported an adjusted loss of 47 per share for first-quarter 2022, wider than the Zacks Consensus Estimate for a loss of 27 cents.

The figure was narrower than the prior-year quarter’s loss of $2.02 per share but compared unfavorably with earnings of $1.06 per share reported in the prior quarter.

Revenues of $2.25 billion surged 81% year over year but declined 1.3% from the previous quarter. Further, the figure missed the Zacks Consensus Estimate of $2.27 billion.

Year-over-year revenue growth was driven by strong recovery across all the company’s lines of business, owing to the increasing travel resiliency of people. Improved travel demand from the year-ago quarter contributed well.

However, the company continued to witness travel disruptions due to the spread of the COVID-19 variant, Omicron, at the beginning of the first quarter. Also, the ongoing Russia-Ukraine war led to a slowdown in travel demand in Europe to some extent.

Nevertheless, strong recovery in the city, international and business travel throughout the world remained a major positive.

Expedia’s gross bookings were $24.4 billion, which increased 58% year over year and 39.8% from the prior quarter. Improvement in lodging, air and other travel products contributed well.

Although the coronavirus pandemic-led uncertainties, inflationary pressure and geopolitical tensions are expected to persist in the global travel industry, the growing confidence among people regarding travel remains a tailwind. Optimism regarding the ongoing vaccination drive remains another positive.

Revenues by Segment

Retail: The company generated $1.74 billion in revenues (77.4% of total revenues) from the segment, surging 70% year over year.

B2B: The segment yielded revenues of $432 million (19.2% of total revenues), up 135% from the year-ago quarter.

trivago: Revenues from the segment totaled $116 million (5.2% of revenues), up 153% year over year.

Revenues by Business Model

The Merchant model generated revenues of $1.49 billion (66% of revenues), up 86% year over year. Merchant gross bookings were $13.1 billion, up 50% from the prior-year quarter.

The Agency division generated revenues of $566 million (25.2% of revenues), improving 75% from the prior-year quarter. Agency gross bookings were $11.3 billion, up 68% year over year.

Advertising & Media and Other generated $198 million of revenues (8.8% of the top line), increasing 57% from the year-ago quarter. This can primarily be attributed to the strong performance of Expedia Media Solutions and trivago. Also, growing momentum across travel insurance and car products contributed well.

Revenues by Geography

Expedia generated $1.7 billion in revenues (73.6% of total revenues) from domestic regions, up 65% from the prior-year quarter.

Revenues generated from international regions totaled $593 million (26.4% of revenues), up 142% on a year-over-year basis.

Revenues by Product Line

Lodging revenues accounted for 72% of the total revenues. The company witnessed 78% growth in Lodging revenues, owing to the solid momentum in stayed room nights, which grew 52%. The company witnessed a 17% rise in revenues per room night.

Air revenues accounted for 3% of the total revenues. Notably, the company witnessed 50% growth in Air revenues, owing to growth of 48% in air tickets sold.

Operating Details

Adjusted EBITDA was $173 million in the reported quarter compared with ($58) million in the year-ago quarter.

Adjusted selling and marketing expenses were $1.3 billion, up 105% year over year. As a percentage of revenues, the figure expanded 699 basis points (bps) year over year.

Adjusted general and administrative expenses were $141 million, up 15% year over year. The figure contracted 353 bps year over year as a percentage of revenues.

Adjusted technology and content expenses were $243 million, up 11% from the year-ago quarter. The figure contracted 682 bps from the year-ago quarter as a percentage of revenues.

The company reported a first-quarter operating loss of $135 million compared with a loss of $369 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash and cash equivalents were $5.5 billion, up from $4.1 billion as of Dec 31, 2021. Short-term investments were nil at the end of the reported quarter compared with $200 million at the end of the previous quarter.

Long-term debt was $7.719 billion at the end of the first quarter compared with $7.715 billion at the end of the fourth quarter.

Expedia generated $3 billion of cash from operations in the quarter under review compared with $285 million in the last reported quarter.

Free cash flow was $2.8 billion in the first quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 16.86% due to these changes.

VGM Scores

At this time, Expedia has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Expedia has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.