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HomeAway, Inc. Reports First Quarter 2013 Financial Results



HomeAway, Inc. Reports First Quarter 2013 Financial Results

 − Total revenue of $79.5 million, up 24.0% year-over-year and up 24.2% on an
                       FX neutral basis, year-over-year

         − Adjusted EBITDA of $21.8 million, up 56.1% year-over-year

  − TTM Free Cash Flow generation of $90.4 million, up 21.3% year-over-year

AUSTIN, Texas, April 23, 2013 (GLOBE NEWSWIRE) -- HomeAway, Inc.
(Nasdaq:AWAY), the world's leading online marketplace for the vacation rental
industry, today reported its financial results for the first quarter ended
March 31, 2013.

Management Commentary

"We're thrilled with our start to the year and our ability to continue
delivering financial results ahead of our expectations," says Brian Sharples,
chief executive officer of HomeAway. "For the first quarter, we delivered
year-over-year growth of 24% in total revenue and 56% in adjusted EBITDA. Due
to the subscription nature of our business model, we are afforded a
high-degree of revenue visibility in addition to attractive profitability and
free cash flow characteristics."

Mr. Sharples continues, "Year-after-year, we pride ourselves on being the
leading destination for travelers seeking vacation rentals for family and
group travel. For the quarter, traffic was up 22% over the prior year, with
the total business attracting over 207 million visits, a new record for
HomeAway. We continue to uphold our reputation as one of the most efficient
marketing channels for individual owners and property managers alike. We look
forward to building upon our category leadership through continued investment
in product innovation and the initial launch of our pay-per-booking product to
individual U.S. owners by the end of the third quarter of this year."

First Quarter 2013 Financial Highlights

  * Total revenue increased 24.0% to $79.5 million from $64.1 million in the
    first quarter of 2012. On an FX neutral basis, year-over-year revenue
    growth was 24.2%. Growth in total revenue primarily reflects an increase
    in new listings, an increase in average revenue per listing as a result of
    tiered pricing and bundled product offerings and the benefit of ancillary
    product and service revenue.
  * Listing revenue increased 23.8% to $66.8 million from $54.0 million in the
    first quarter of 2012. On an FX neutral basis, year-over-year listing
    revenue growth was 24.1%.
  * Other revenue, which is comprised of ancillary revenue from owners and
    travelers, advertising, software and other items, increased 24.6% to $12.6
    million from $10.1 million in the first quarter of 2012. Growth in other
    revenue primarily reflects the introduction and enhanced distribution of
    value-added owner, manager and traveler products.
  * Adjusted EBITDA increased 56.1% to $21.8 million from $14.0 million in the
    first quarter of 2012.  As a percentage of revenue, adjusted EBITDA was
    27.4%. 
  * Free cash flow increased 18.4% to $33.3 million from $28.2 million in the
    first quarter of 2012. 
  * Net income was $5.3 million, or $0.06 per diluted share, compared to net
    income of $2.4 million, or $0.03 per diluted share, in the first quarter
    of 2012.
  * Pro forma net income was $12.2 million, or $0.14 per diluted share,
    compared to pro forma net income of $7.4 million, or $0.09 per diluted
    share, in the first quarter of 2012. 
  * Cash, cash equivalents and short-term investments as of March 31, 2013
    were $314.4 million, or approximately $3.63 per diluted share.

Key Business Metrics

  * Paid listings at the end of the first quarter were 742,299, a
    year-over-year increase of 6.2% from 699,088 at the end of the first
    quarter of 2012. 
  * Average revenue per listing during the first quarter was $368, a 14.3%
    increase from $322 during the first quarter of 2012. Excluding the impact
    of FX and pay-per-lead listings, average revenue per subscription listing
    increased 13.5% year-over-year.
  * Renewal rate was 73.6% at the end of the first quarter, compared to 77.0%
    at the end of the first quarter of 2012 and 73.8% at the end of the fourth
    quarter of 2012.
  * Visits were 207.1 million during the first quarter, a year-over-year
    increase of 29.7%. During the fourth quarter of 2012, HomeAway began using
    a different tool for the measurement of visits for certain of its
    websites. On a comparable basis, HomeAway estimates that visits would have
    increased by 22.1% year-over-year.

Note: The recent ability of customers to consolidate listings and to purchase
network product bundles impacts comparability of HomeAway's previously
reported metrics for the first quarter of 2013, and for future periods. Absent
this change, HomeAway estimates:

  * Paid listings growth would have been approximately 9.5%;
  * Average revenue per listing would have been $359 and when excluding the
    impact of the same adjustments for consolidated listings and new bundled
    offerings, in addition to FX and pay-per-lead listings, average revenue
    per subscription listing would have been up 10.3%; and
  * Renewal rate would have been 74.9%, compared to 77.0% at the end of the
    first quarter of 2012 and 74.4% at the end of the fourth quarter of 2012.

Business Outlook

HomeAway management currently expects to achieve the following results for
second quarter ending June 30, 2013 and the year ending December 31, 2013, as
follows:

Second Quarter 2013

  * Total revenue is expected to be in the range of $85.0 to $86.0 million.
  * Adjusted EBITDA is expected to be in the range of $22.5 to $23.0 million.

Full Year 2013

  * Total revenue is expected to be in the range of $338.0 to $341.0 million.
  * Adjusted EBITDA is expected to be in the range of $97.5 to $100.0 million.

The above statements are based on current expectations and actual results may
differ materially as explained in the "Cautionary Statement Regarding
Forward-looking Statements" below. Information about HomeAway's use of
non-GAAP financial measures and key business metrics is provided below under
the captions "Use of Non-GAAP Financial Measures" and "Use of Key Business
Metrics."

Conference Call & Webcast Information

HomeAway will host a conference call to review and discuss its first quarter
2013 results today at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. To
participate in the conference call, investors should join ten minutes prior to
the scheduled start time. Callers in the United States and Canada should join
by dialing (877) 407-0784, passcode 411878. Callers outside the United States
and Canada should join by dialing (201) 689-8560, passcode 411878. In
addition, a live webcast of the call will be accessible through the Investor
Relations section of HomeAway's website at http://investors.homeaway.com and
will be archived online for 60 days upon completion of the conference call.
For those unable to participate during the live broadcast, a telephonic replay
of the call will also be available from 7:30 p.m. Eastern Time / 6:30 p.m.
Central Time on April 23, 2013 until 11:59 p.m. Eastern Time / 10:59 p.m.
Central Time on May 7, 2013 by dialing (877) 870-5176, passcode 411878, in the
United States and Canada or (858) 384-5517 outside the United States and
Canada, passcode 411878.

About HomeAway

HomeAway, Inc., based in Austin, Texas, is the world's leading online
marketplace for the vacation rental industry, with sites representing over
742,000 paid listings of vacation rental homes in 171 countries. Through
HomeAway, owners and property managers offer an extensive selection of
vacation homes that provide travelers with memorable experiences and benefits,
including more room to relax and added privacy, for less than the cost of
traditional hotel accommodations. The company also makes it easy for vacation
rental owners and property managers to advertise their properties and manage
bookings online. The HomeAway portfolio includes the leading vacation rental
websites HomeAway.com, VRBO.com and VacationRentals.com in the United States;
HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in
Germany; Abritel.fr and Homelidays.com in France; HomeAway.es and Toprural.es
in Spain; AlugueTemporada.com.br in Brazil; and HomeAway.com.au in Australia.

In addition, HomeAway operates BedandBreakfast.com, the most comprehensive
global site for finding bed-and-breakfast properties, providing travelers with
another source for unique lodging alternatives to chain hotels. For more
information about HomeAway, please visit www.HomeAway.com.

Cautionary Statement Regarding Forward-looking Statements

This press release contains "forward-looking" statements, subject to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995,
which are based on HomeAway management's beliefs and assumptions and on
information currently available to management. Forward-looking statements
include information concerning HomeAway's expected, possible or assumed future
results of operations, growth and business outlook; revenue visibility and
profitability and free cash flow characteristics; ability to build upon our
category leadership through continued investment in product innovation and
planned launch of our pay-per-booking product.

Forward-looking statements include all statements that are not historical
facts and may be identified by terms such as "continues," "plans," "believes,"
"expects," "anticipates," "could," "look forward to," or similar expressions
and the negatives of those terms. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause HomeAway's
actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to the following: (a) HomeAway's
inability to continue to attract and maintain a critical mass of property
listings and travelers, (b) a decrease in renewal of listings, (c) HomeAway's
inability to effectively manage its growth, (d) HomeAway's inability to
increase sales to existing property owners and managers and attract new ones,
(e) changes in HomeAway's pricing policies or those of its competitors, (f)
HomeAway's inability to execute its product and services development roadmap,
(g) the impact of general economic conditions, (h) fluctuations in foreign
exchange rates, (i) HomeAway's inability to introduce successful new products
and services and (j) such other risks and uncertainties described more fully
in documents filed with or furnished to the Securities and Exchange Commission
(the "SEC"), including HomeAway's most recent 10-K, filed on February 27,
2013. All information provided in this press release is as of the date hereof
and, except as required by law, HomeAway assumes no obligation to update this
information, even if new information becomes available in the future.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures: Adjusted EBITDA, free
cash flow and pro forma net income. Adjusted EBITDA, free cash flow and pro
forma net income are financial measures that are not calculated in accordance
with accounting principles generally accepted in the United States, or
GAAP. HomeAway defines Adjusted EBITDA as its net income (loss) plus
depreciation; amortization of intangible assets; interest expense, net; income
tax expense (benefit); stock-based compensation expense, all net of any
foreign exchange income or expense. HomeAway defines free cash flow as its
cash provided by operating activities, adjusted for cash interest expense and
excess tax benefit (shortfall) from stock-based compensation, and subtracting
capital expenditures. For the purpose of calculating free cash flow, HomeAway
considers purchases of property, equipment, tenant improvements for its
offices, and software licenses (including costs associated with internally
developed software) as capital expenditures. HomeAway defines pro forma net
income as its net income (loss) plus the after-tax effect of stock-based
compensation expense and amortization of intangible assets, utilizing an
effective tax rate of 35%. The income tax effect of adjustments to pro forma
net income assists investors in understanding the tax provision related to
those adjustments and the effective tax rate of 35% related to ongoing
operations.

HomeAway management believes that the use of Adjusted EBITDA, free cash flow
and pro forma net income are useful to investors in evaluating its operating
performance for the following reasons:

  * HomeAway management uses Adjusted EBITDA, free cash flow and pro forma net
    income in conjunction with GAAP financial measures as part of its
    assessment of its business and in communications with its board of
    directors concerning its financial performance;
  * Adjusted EBITDA, free cash flow and pro forma net income provide
    consistency and comparability with HomeAway's past financial performance,
    facilitate period-to-period comparisons of operations, and also facilitate
    comparisons with other peer companies, many of which use similar non-GAAP
    financial measures to supplement their GAAP results;
  * Securities analysts use Adjusted EBITDA, free cash flow and pro forma net
    income as supplemental measures to evaluate the overall operating
    performance of companies, and HomeAway management anticipates that its
    investor and analyst presentations will include Adjusted EBITDA, free cash
    flow and pro forma net income; and
  * Adjusted EBITDA and pro forma net income excludes non-cash charges, such
    as depreciation, amortization and stock-based compensation, because such
    non-cash expenses in any specific period may not directly correlate to the
    underlying performance of HomeAway's business operations and can vary
    significantly between periods.

Adjusted EBITDA, free cash flow and pro forma net income should not be
reviewed in isolation. Investors should consider them in addition to, and not
as substitutes for, measures of HomeAway's financial performance reported in
accordance with GAAP. HomeAway's Adjusted EBITDA, free cash flow or pro forma
net income may not be comparable to similarly titled measures of other
companies because other companies may not calculate such measures in the same
manner as HomeAway does. Adjusted EBITDA, free cash flow and pro forma net
income have limitations as analytical tools. As an example, although
depreciation and amortization are non-cash charges, the assets being
depreciated or amortized will often need to be replaced in the future, and
Adjusted EBITDA, free cash flow and pro forma net income do not reflect any
cash requirements for these replacements. In addition, none of these measures
reflect future requirements for contractual obligations.

Further limitations of Adjusted EBITDA include:

  * this measure does not reflect changes in working capital;
  * this measure does not reflect interest income or interest expense; and
  * this measure does not reflect cash requirements for income taxes.

Reconciliation tables of the most comparable GAAP financial measures to the
non-GAAP measures used in this press release are included at the end of this
release.

Use of Key Business Metrics

A paid listing is defined by HomeAway as a fee to list a property
advertisement on one or more websites in its marketplace. A paid listing
allows a property owner or manager to include a description of the property,
along with location, pricing, availability, a specified number of photos and
contact information. Most listings are sold on a subscription basis, and some
listing packages may include listings on more than one of HomeAway's websites.
When purchased at the same time in one bundle, HomeAway counts this as one
paid listing. Listings are also sold on a pay-for-performance basis to
property managers.

Average revenue per listing is computed by HomeAway as listing revenue for the
period divided by the average of paid listings at the beginning and end of the
period and then annualizing the result. The price of listings varies by
website and can include various additional fees associated with listing
enhancements. The average revenue per listing may fluctuate based on the
timing and nature of acquisitions, impacting the number of average paid
listings for a given period; changes in HomeAway's base pricing; uptake of
listing enhancements; changes in the pricing of enhancements; changes in brand
and listing type mix; and the impact of foreign exchange rates on HomeAway's
listing revenue outside of the United States.

The renewal rate for HomeAway's subscription listings at the end of any period
is defined as the percentage of those paid listings that were active at the
end of the period ended twelve months prior that are still active as of the
end of the reported period. HomeAway includes most brands in its calculation
of renewal rate. Subscriptions to BedandBreakfast.com and Toprural.es remain
excluded until HomeAway can further develop its database system. 

Visits to websites are measured by HomeAway through the use of a variety of
tools, including solutions from third parties such as Omniture, Google
Analytics and eStat.

HomeAway, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
                                                                  
                                                  Three Months Ended March 31,
                                                  2013           2012
Revenue:                                                          
Listing                                            $ 66,831       $ 53,968
Other                                              12,633         10,135
Total revenue                                      79,464         64,103
Costs and expenses:                                               
Cost of revenue (exclusive of amortization shown   13,281         10,532
separately below)
Product development                                12,399         9,702
Sales and marketing                                26,367         24,734
General and administrative                         16,049         12,837
Amortization expense                               3,180          2,448
Total costs and expenses                           71,276         60,253
Operating income                                   8,188          3,850
Other income (expense):                                           
Interest income                                    243            169
Other expense, net                                 (1,591)        (728)
Total other income (expense)                       (1,348)        (559)
Income before income taxes                         6,840          3,291
Income tax expense                                 (1,545)        (890)
Net income                                         $ 5,295        $ 2,401
Net income per share:                                             
Basic and diluted                                  $ 0.06         $ 0.03
Weighted average number of shares outstanding:                    
Basic                                              83,940         81,353
Diluted                                            86,492         84,500

 
 
HomeAway, Inc. 
Condensed Consolidated Balance Sheets 
(Unaudited, in thousands) 
                                                                   
                                                       March 31,  December 31,
                                                        2013       2012 
Assets                                                             
Current assets:                                                    
Cash and cash equivalents                               $ 187,246  $ 189,478
Short-term investments                                  127,141    80,330
Accounts receivable, net of allowance for doubtful
accounts of $585 and $633 as of March 31, 2013 and      17,954     16,343
December 31, 2012, respectively 
Income tax receivable                                   766        775
Prepaid expenses and other current assets               8,095      7,312
Restricted cash                                         173        284
Deferred tax assets                                     5,355      5,425
Total current assets                                    346,730    299,947
Property and equipment, net                             34,908     32,901
Goodwill                                                308,635    312,412
Intangible assets, net                                  56,117     59,727
Restricted cash                                         574        230
Deferred tax assets                                     2,126      1,807
Other non-current assets                                19,195     15,651
Total assets                                            $ 768,285  $ 722,675
Liabilities and stockholders' equity                               
Current liabilities:                                               
Accounts payable                                        $ 6,722    $ 6,613
Income tax payable                                      9,134      11,137
Accrued expenses                                        31,683     33,856
Deferred revenue                                        147,039    126,351
Total current liabilities                               194,578    177,957
Deferred revenue, less current portion                  2,672      2,879
Deferred tax liabilities                                16,756     17,615
Other non-current liabilities                           8,119      7,191
Total liabilities                                       222,125    205,642
Commitments and contingencies                                      
Stockholders' equity                                               
Common stock                                            8          8
Additional paid-in capital                              647,053    618,700
Accumulated other comprehensive loss                    (9,971)    (5,450)
Accumulated deficit                                     (90,930)   (96,225)
Total stockholders' equity                              546,160    517,033
Total liabilities and stockholders' equity              $ 768,285  $ 722,675

 
 
HomeAway, Inc. 
Condensed Consolidated Statements of Cash Flows 
(Unaudited, in thousands) 
                                                                     
                                                         Three Months
                                                         Ended March 31, 
                                                         2013       2012
Cash flows from operating activities                                 
Net income                                                $ 5,295    $ 2,401
Adjustments to reconcile net income to net cash provided             
by operating activities:
Depreciation                                              3,044      2,455
Amortization of intangible assets                         3,180      2,448
Amortization of premiums on securities and other          801        562
Stock-based compensation                                  7,456      5,198
Excess tax benefit from stock-based compensation          (1,358)    (603)
Deferred income taxes                                     (1,218)    3,514
Net realized/unrealized foreign exchange gain             (16)       (654)
Realized loss on foreign currency forwards                1,259      1,328
Changes in operating assets and liabilities, net of                  
assets and liabilities assumed in business combinations:
Accounts receivable                                       (1,880)    (813)
Income tax receivable                                     (347)      -- 
Prepaid expenses and other assets                         (1,378)    (6,464)
Accounts payable                                          (258)      3,114
Accrued expenses                                          (406)      436
Income tax payable                                        (4)        (3,043)
Deferred revenue                                          22,300     20,177
Deferred rent and other non-current liabilities           1,011      3,304
Net cash provided by operating activities                 37,481     33,360
Cash flows from investing activities                                 
Change in restricted cash                                 (247)      313
Cash paid for trademarks and other assets acquired        (30)       (45)
Cash paid for non-marketable equity investment            (3,667)    -- 
Purchases of short-term investments                       (62,713)   (9,258)
Proceeds from maturities of marketable securities         15,000     11,457
Net settlement of foreign currency forwards               (1,259)    (1,328)
Purchases of property and equipment                       (5,505)    (5,809)
Net cash used in investing activities                     (58,421)   (4,670)
Cash flows from financing activities                                 
Proceeds from exercise of options to purchase common      19,539     10,937
stock 
Excess tax benefit from stock-based compensation          1,358      603
Net cash provided by financing activities                 20,897     11,540
Effect of exchange rate changes on cash                   (2,189)    990
Net (decrease) increase in cash and cash equivalents      (2,232)    41,220
Cash and cash equivalents at beginning of period          189,478    118,208
Cash and cash equivalents at end of period                $ 187,246  $ 159,428

 
 
HomeAway, Inc. 
Schedule of Non-GAAP Reconciliations 
(Unaudited, in thousands) 
                                                             
                                                   
                                                  Three Months
                                                  Ended March 31, 
                                                  2013      2012
Net income                                         $ 5,295   $ 2,401
Add:                                                         
Depreciation and amortization                      6,224     4,903
Stock-based compensation                           7,456     5,198
Interest income                                    (243)     (169)
Foreign exchange expense                           1,535     751
Income tax expense                                 1,545     890
Adjusted EBITDA                                    $ 21,812  $ 13,974
                                                             
                                                  Three Months
                                                  Ended March 31, 
                                                  2013      2012
Cash provided by operating activities              $ 37,481  $ 33,360
Excess tax benefit from stock-based compensation   1,358     603
Capital expenditures                               (5,505)   (5,809)
Free cash flow                                     $ 33,334  $ 28,154
                                                             
                                                  Three Months
                                                  Ended March 31, 
                                                  2013      2012
Net income                                         $ 5,295   $ 2,401
Add:                                                         
Stock-based compensation                           7,456     5,198
Amortization expense                               3,180     2,448
Related tax effect                                 (3,723)   (2,676)
Pro forma net income                               $ 12,208  $ 7,371

 
 
HomeAway, Inc. 
Supplemental Financial Information 
(Unaudited, in thousands) 
                                      
                            Three Months
                            Ended March 31, 
                            2013     2012
                                      
Stock-based compensation:             
Cost of revenue              $ 845    $ 416
Product development          1,727    1,231
Sales and marketing          1,608    1,270
General and administrative   3,276    2,281
Total                        $ 7,456  $ 5,198
                                      
                            Three Months
                            Ended March 31, 
                            2013     2012
                                      
Depreciation:                         
Cost of revenue              $ 1,023  $ 819
Product development          684      549
Sales and marketing          944      766
General and administrative   393      321
Total                        $ 3,044  $ 2,455

CONTACT: Investor Contact:
         HomeAway Investor Relations
         (512) 505-1700
         investors@homeaway.com
         or Addo Communications at (310) 829-5400
        
         Media Contact:
         Eileen Buesing
         VP of Communications, HomeAway, Inc.
         (512) 493-0375
         ebuesing@homeaway.com
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