Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37429 EXPEDIA GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 20-2705720 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1111 Expedia Group Way W. Seattle, WA 98119 (Address of principal executive office) (Zip Code) (206) 481-7200 (Registrant’s telephone number, including area code) __________________________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered Common stock, $0.0001 par value EXPE The Nasdaq Global Select Market Expedia Group, Inc. 2.500% Senior Notes due 2022 EXPE22 New York Stock Exchange The number of shares outstanding of each of the registrant’s classes of common stock as of July 23, 2021 was: Common stock, $0.0001 par value per share 145,296,350 shares Class B common stock, $0.0001 par value per share 5,523,452 shares Table of Contents Expedia Group, Inc. Form 10-Q For the Quarter Ended June 30, 2021 Contents Part I Financial Information Item 1 Consolidated Financial Statements Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited) 2 Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited) 3 Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020 4 Consolidated Statements of Stockholders Equity for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited) 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited) 7 Notes to Consolidated Financial Statements (unaudited) 8 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3 Quantitative and Qualitative Disclosures about Market Risk 43 Item 4 Controls and Procedures 44 Part II Other Information Item 1 Legal Proceedings 45 Item 1A Risk Factors 46 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 46 Item 6 Exhibits 47 Signature 48 Table of Contents Part I. Item 1. Consolidated Financial Statements EXPEDIA GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2021 2020 2021 2020 Revenue $ 2,111 $ 566 $ 3,357 $ 2,775 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below) (1) 374 381 685 1,010 Selling and marketing (1) 1,199 291 1,863 1,496 Technology and content (1) 276 271 523 586 General and administrative (1) 184 149 340 334 Depreciation and amortization 205 232 414 461 Impairment of goodwill — 20 — 785 Impairment of intangible assets — 10 — 131 Legal reserves, occupancy tax and other (8) 8 (9) (13) Restructuring and related reorganization changes 13 53 42 128 Operating loss (132) (849) (501) (2,143) Other income (expense): Interest income 1 3 3 13 Interest expense (83) (95) (181) (145) Loss on debt extinguishment — — (280) — Other, net (10) (12) (15) (157) Total other expense, net (92) (104) (473) (289) Loss before income taxes (224) (953) (974) (2,432) Provision for income taxes 47 213 216 295 Net loss (177) (740) (758) (2,137) Net loss attributable to non-controlling interests 5 4 8 100 Net loss attributable to Expedia Group, Inc. (172) (736) (750) (2,037) Preferred stock dividend (22) (17) (50) (17) Loss on redemption of preferred stock (107) — (107) — Net loss attributable to Expedia Group, Inc. common stockholders $ (301) $ (753) $ (907) $ (2,054) Loss per share attributable to Expedia Group, Inc. available to common stockholders Basic $ (2.02) $ (5.34) $ (6.16) $ (14.57) Diluted (2.02) (5.34) (6.16) (14.57) Shares used in computing earnings (loss) per share (000's): Basic 149,093 141,072 147,148 140,947 Diluted 149,093 141,072 147,148 140,947 _______ (1) Includes stock-based compensation as follows: Cost of revenue $ 6 $ 3 $ 11 $ 6 Selling and marketing 32 13 49 25 Technology and content 32 18 59 38 General and administrative 50 20 84 40 See accompanying notes. 2 Table of Contents EXPEDIA GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) (Unaudited) Three months ended Six months ended June 30, June 30, 2021 2020 2021 2020 Net loss $ (177) $ (740) $ (758) $ (2,137) Currency translation adjustments, net of tax(1) 19 34 (18) (56) Comprehensive loss (158) (706) (776) (2,193) Less: Comprehensive income (loss) attributable to non-controlling interests 1 2 (18) (100) Less: Preferred stock dividend 22 17 50 17 Less: Loss on redemption of preferred stock 107 — 107 — Comprehensive loss attributable to Expedia Group, Inc. common stockholders $ (288) $ (725) $ (915) $ (2,110) (1) Currency translation adjustments include tax benefit of $3 million and tax expense of $6 million associated with net investment hedges for the three and six months ended June 30, 2021 and tax benefit of $3 million and $1 million for the three and six months ended June 30, 2020. See accompanying notes. 3 Table of Contents EXPEDIA GROUP, INC. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares, which are reflected in thousands, and par value) June 30, December 31, 2021 2020 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 5,464 $ 3,363 Restricted cash and cash equivalents 2,541 772 Short-term investments 11 24 Accounts receivable, net of allowance of $86 and $101 1,440 701 Income taxes receivable 399 120 Prepaid expenses and other current assets 1,258 654 Total current assets 11,113 5,634 Property and equipment, net 2,261 2,257 Operating lease right-of-use assets 467 574 Long-term investments and other assets 663 671 Deferred income taxes 850 659 Intangible assets, net 1,457 1,515 Goodwill 7,370 7,380 TOTAL ASSETS $ 24,181 $ 18,690 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable, merchant $ 1,157 $ 602 Accounts payable, other 778 496 Deferred merchant bookings 8,240 3,107 Deferred revenue 172 172 Income taxes payable 328 50 Accrued expenses and other current liabilities 1,038 979 Total current liabilities 11,713 5,406 Long-term debt 8,480 8,216 Deferred income taxes 22 67 Operating lease liabilities 408 513 Other long-term liabilities 465 462 Commitments and contingencies Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 600 and 1,200 511 1,022 Stockholders’ equity: Common stock: $.0001 par value; Authorized shares: 1,600,000 — — Shares issued: 269,239 and 261,564; Shares outstanding: 145,197 and 138,074 Class B common stock: $.0001 par value; Authorized shares: 400,000 — — Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523 Additional paid-in capital 13,995 13,566 Treasury stock - Common stock and Class B, at cost; Shares 131,318 and 130,767 (10,182) (10,097) Retained earnings (deficit) (2,531) (1,781) Accumulated other comprehensive income (loss) (186) (178) Total Expedia Group, Inc. stockholders’ equity 1,096 1,510 Non-redeemable non-controlling interests 1,486 1,494 Total stockholders’ equity 2,582 3,004 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 24,181 $ 18,690 See accompanying notes. 4 Table of Contents EXPEDIA GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In millions, except share and per share data) (Unaudited) Class B Treasury stock - Common Accumulated Non- Three months ended June 30, 2020 Common stock common stock Additional and Class B Retained other redeemable paid-in earnings comprehensive non-controlling Shares Amount Shares Amount capital Shares Amount (deficit) income (loss) interest Total Balance as of March 31, 2020