(Reuters) - Online travel agency Expedia Inc reported a third-quarter profit that beat Wall Street estimates and said business referrals from review site TripAdvisor Inc. have improved, sending its shares up 18 percent in extended trading.
Online travel agencies such as Expedia and Priceline.com depend heavily on leads from TripAdvisor. Changes made to this system during the summer were blamed in part by Expedia for a dismal second quarter.
“Expectations were pretty low heading into the quarter. I think Expedia showed that it has stabilized or even improved on some of the issues that affected them in the second quarter,” Macquarie Research analyst Tom White said.
Tripadvisor’s new method of directing travelers to partner sites held out the promise of converting more leads into bookings, and Expedia said this system was now performing better.
“Although we see the performance in this channel vary week by week, and also by geography, our bidding models are improving and we’re generally regaining click share,” Chief Executive Dara Khosrowshahi said in a post-earnings call.
Gross bookings in the third quarter increased 15 percent, primarily driven by its Expedia, Hotels.com and eLong websites. Travel in the U.S. has picked up in recent months with hotel chains posting stronger results this quarter.
Net income fell to $170.9 million, or $1.22 a diluted share, in the third quarter, compared with $171.5 million, or $1.20 a share, a year earlier.
Excluding one-times items, the company earned $1.43 per share. Revenue rose 17 percent to $1.40 billion.
Analysts on average expected earnings of $1.35 on revenue of $1.37 billion, according to Thomson Reuters I/B/E/S.
Expedia shares closed at $49.96 on the Nasdaq on Wednesday.
Additional reporting by Karen Jacobs in Atlanta; Editing by Dan Grebler and Rodney Joyce