Online travel agency Expedia Inc (EXPE.O) posted a higher-than-expected quarterly profit on Thursday, and its shares rose in extended trading as it sold more hotel stays and airline tickets in the fourth quarter than the previous year.
Expedia, whose brands include Hotels.com, Hotwire and corporate travel business Egencia, has been spending on technology systems and international expansion to better compete against rivals such as Priceline.com (PCLN.O). Those moves bore fruit for the U.S. company in the fourth quarter.
"You're starting to see margins tick upward," said Daniel Kurnos, an analyst with the Benchmark Company. "People are starting to see that this can still be an accelerating growth engine on the bottom line" as Expedia moves into emerging markets and the rollout of a program that gives travelers a choice of how they want to pay at hotels, he said.
The 2013 purchase of a majority stake in the German hotel metasearch business trivago paid dividends, as Expedia said it added about four percentage points to revenue growth in the fourth quarter.
Expedia said air ticket volumes and its business from metasearch sites such as TripAdvisor kept improving. "I think we're getting into a better operational rhythm here," Expedia Chief Executive Officer Dara Khosrowshahi said during a conference call.
Net income totaled $94.7 million, or 70 cents a diluted share, in the fourth quarter, compared with $6.7 million, or 5 cents a share, in the same quarter a year earlier.
Adjusted for special items, profit was 92 cents a share, compared with 86 cents expected by analysts on average, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 18 percent to $1.15 billion. Hotels accounted for 71 percent of overall revenue, compared with 21 percent for advertising and media. Air tickets accounted for 8 percent of revenue.
Average daily room rates were flat in the fourth quarter while the average airfare rose 1 percent.
But the company also said its quantity of air tickets sold rose 13 percent while hotel room night growth soared 25 percent.
Shares of Expedia rose as much as 12 percent to over $73 in extended trading from their Nasdaq close of $65.14.
(Reporting by Karen Jacobs in Atlanta; Editing by Leslie Adler, G Crosse and Lisa Shumaker)