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HomeAway, Inc. Reports First Quarter 2014 Financial Results(GlobeNewswire Via Acquire Media NewsEdge) - Total revenue of $105.7 million, up 33.0% year-over-year - Adjusted EBITDA of $26.2 million, up 19.9% year-over-year - Ending paid listings of approximately 952,000 up 28.2% year-over-year - Adjusted Renewal Rate of 76.2%, up from 74.9% in Q1 2013 AUSTIN, Texas, April 24, 2014 (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, 2014. Management Commentary "I'm very pleased with our start to the year, and our team's continued focus and execution which has, once again, allowed us to deliver financial results ahead of our expectations," says Brian Sharples, chief executive officer of HomeAway. "Revenue growth of 33% accelerated sharply from 2013 levels, benefitting from both expansion of our marketplace as well as improved network monetization, a result of our continued success with tiered pricing and bundled product offerings." Mr. Sharples continued, "Importantly, on the heels of our successful pay-per-booking launch in the fourth quarter of 2013, the health of our subscription business remains strong, as evidenced by two consecutive quarters of improving renewal rates. With respect to pay-per-booking, while still early in the rollout, the team continued to make strong progress in both the deployment and rollout of our integrated and platform pay-per-booking products. With this in mind, we look forward to making our platform pay-per-booking product available to our largest European sites in the coming quarter." First Quarter 2014 Financial Highlights Total revenue increased 33.0% to $105.7 million from $79.5 million in the first quarter of 2013. On an FX neutral basis, year-over-year revenue growth was 31.8%. Growth in total revenue primarily reflected an increase in average revenue per listing as a result of tiered pricing and bundled product offerings, an increase in new listings and the benefit of ancillary product and services revenue. Listing revenue increased 30.5% to $87.3 million from $66.9 million in the first quarter of 2013. On an FX neutral basis, year-over-year listing revenue growth was 29.1%. Other revenue, which is comprised of ancillary revenue from owners and travelers, advertising, software and other items, increased 46.6% to $18.4 million from $12.5 million in the first quarter of 2013. Growth in other revenue primarily reflected increased adoption of value-added owner, manager and traveler products. Adjusted EBITDA increased 19.9% to $26.2 million from $21.8 million in the first quarter of 2013. As a percentage of revenue, adjusted EBITDA was 24.8% compared to 27.4% in the first quarter of 2013. Impacting year-over-year comparability of Adjusted EBITDA in the first quarter of 2014 was approximately $1.8 million in one-time expenses related to a reserve for operating taxes outside of the United States. Free cash flow increased 16.2% to $38.7 million from $33.3 million in the first quarter of 2013. On a trailing twelve month basis, free cash flow increased 8.8% to $98.4 million from $90.4 million in the comparable trailing twelve month period for the prior year. Net income attributable to HomeAway was $4.4 million, or $0.05 per diluted share, compared to net income attributable to HomeAway of $5.3 million, or $0.06 per diluted share, in the first quarter of 2013. Non-GAAP net income was $13.2 million, or $0.14 per diluted share, compared to non-GAAP net income of $12.2 million, or $0.14 per diluted share, in the first quarter of 2013.Key Business Metrics Paid listings at the end of the first quarter were 951,843, a year-over-year increase of 28.2% from 742,299 at the end of the first quarter of 2013. At the end of the first quarter, 724,699 of the listings were subscription listings and 227,144 were performance-based listings. Average revenue per subscription listing during the first quarter was $442, an FX neutral increase of 10.7% compared to the prior year. Renewal rate was 73.1% at the end of the first quarter, compared to 73.6% at the end of the first quarter of 2013 and 72.5% at the end of the fourth quarter of 2013. Adjusting for the impact of consolidated listings and network bundles, renewal rate for the first quarter of 2014 would have been 76.2%, compared to 74.9% at the end of the first quarter of 2013 and 75.3% at the end of the fourth quarter of 2013. Visits were 245.1 million during the first quarter, a year-over-year increase of 18.3%.Historical Quarterly Business Metrics For the three months ended: March 31,June 30,September December March 31, 2013201330, 201331, 20132014 Subscription Listings, end of period 686,000 706,238 691,785 697,481 724,699 Performance Listings, end of period 56,299 68,994 81,567 192,394 227,144 Total Paid Listings, end of period 742,299 775,232 773,352 889,875 951,843 Average Revenue per Subscription Listing $394 $416 $428 $435 $442 FX Neutral Year-Over-Year Growth of Average Revenue per Subscription Listing 13.5% 13.7% 15.3% 13.2% 10.7%Corporate Developments On March 5, 2014, HomeAway announced the acquisition of Glad to Have You, Inc., the creator of the vacation rental industry's leading mobile guest management solution designed specifically for property managers and homeowners to improve the way they manage and communicate with guests during their stay. On March 31, 2014, HomeAway completed a convertible debt offering in the aggregate amount of $402.5 million, which includes the full exercise of the initial purchasers' over-allotment option. HomeAway received net proceeds of approximately $391.4 million after deducting fees and estimated offering expenses payable by HomeAway. The notes will be senior, unsecured obligations of HomeAway, and will bear interest at a rate of 0.125% per year. Interest will be payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2014. The notes will mature on April 1, 2019, unless earlier repurchased or converted. Concurrent with the issuance of the notes, HomeAway entered into convertible note hedge transactions which are expected to reduce the potential dilution to HomeAway's common stock upon conversion of the notes. HomeAway paid $85.9 million for the note hedge transactions. Additionally in March 2014, HomeAway sold warrants for cash consideration of $38.3 million to purchase shares of its common stock. The net cash generated in March 2014 from these transactions was $343.9 million. Mr. Sharples commented, "The convertible offering was very well received and we were delighted with the exceptional terms of the deal. Having built HomeAway by selected acquisitions, along with a focus on the organic growth of the company, we look forward to leveraging the flexibility our expanded financial position affords us to evaluate future targets across new markets, geographies and technologies." Business Outlook HomeAway management currently expects to achieve the following results for second quarter ending June 30, 2014 and full year ending December 31, 2014: Second Quarter 2014 Total revenue is expected to be in the range of $109.0 to $111.0 million. Adjusted EBITDA is expected to be in the range of $28.0 to $29.0 million. Full Year 2014 Total revenue is expected to be in the range of $435.0 to $442.5 million. Adjusted EBITDA is expected to be in the range of $117.0 to $122.5 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 the first quarter results on Thursday, April 24, 2014 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) 407-0789, passcode 13579461. Callers outside the United States and Canada should join by dialing (201) 689-8562, passcode 13579461. 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 24, 2014 through 11:59 p.m. Eastern Time / 10:59 p.m. Central Time on May 8, 2014 by dialing (877) 870-5176, passcode 13579461, in the United States and Canada or (858) 384-5517 outside the United States and Canada, passcode 13579461. About HomeAway HomeAway, Inc. based in Austin, Texas, the world's leading online marketplace for the vacation rental industry, with sites representing approximately 952,000 paid listings of vacation rental homes in 190 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; HomeAway.com.au and Stayz.com.au in Australia; and Bookabach.co.nz in New Zealand. Asia Pacific short-term rental site, travelmob.com, is also owned by HomeAway. HomeAway also 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; roll-out of new products and services; and potential future acquisitions. 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) the impact of pay-per-booking or other changes in HomeAway's pricing policies or those of its competitors, (f) HomeAway's inability to execute its product and services development roadmap, including e-commerce initiatives, (g) the impact of general economic conditions, (h) fluctuations in foreign exchange rates, (i) HomeAway's inability to introduce successful new products and services; (j) the inability to integrate and grow recent acquisitions, and (k) 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 26, 2014. 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, non-GAAP net income and revenue adjusted for foreign currency. Adjusted EBITDA, free cash flow, non-GAAP net income and constant currency revenue 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) attributable to HomeAway, Inc. plus depreciation, amortization of intangible assets, interest expense, net, income tax expense (benefit), stock-based compensation expense, net income (loss) attributable to noncontrolling interests, 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 non-GAAP net income as its net income (loss) attributable to HomeAway, Inc. plus the after-tax effect of stock-based compensation expense, amortization of intangible assets and the impact on noncontrolling interests of these items, utilizing a tax rate of 35%. The income tax effect of adjustments to non-GAAP net income assists investors in understanding the tax provision related to those adjustments and a tax rate of 35% related to ongoing operations. Revenue adjusted for foreign currency assumes foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute constant currency revenue, HomeAway divides its monthly U.S. dollar results by the applicable current year monthly average foreign exchange rates and then multiplies those amounts by the applicable prior year monthly average foreign exchange rates. HomeAway management believes that the use of Adjusted EBITDA, free cash flow, non-GAAP net income and constant currency revenue are useful to investors in evaluating its operating performance for the following reasons: HomeAway management uses Adjusted EBITDA, free cash flow, non-GAAP net income and constant currency revenue 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, non-GAAP net income and constant currency revenue 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, non-GAAP net income and constant currency revenue 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, non-GAAP net income and constant currency revenue; and Adjusted EBITDA and non-GAAP net income exclude 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, non-GAAP net income and constant currency revenue 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, non-GAAP net income or constant currency revenue 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, non-GAAP net income and constant currency revenue 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 non-GAAP 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 We define a paid listing as an advertisement for a property paid via subscription or on a performance basis and displayed on one or more websites in our marketplace. Although listings may be displayed on multiple sites, a paid listing is counted only one time on its native HomeAway brand, or HomeAway website from which the listing originated. Subscription-based paid listings are purchased in advance by property owners or managers as a form of advertising to promote their vacation rentals to prospective travelers on one or more of our websites, typically for one year. Performance-based paid listings allow property owners and managers to list a property with no initial upfront fees and, instead, pay us commissions on traveler bookings or fees on traveler inquiries. Average revenue per subscription listing is computed by HomeAway as subscription listing revenue for the period divided by the average of paid subscription 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; and changes in brand mix. For the purposes of providing a foreign exchange neutral growth rate, subscription revenue per listing is calculated at prior year monthly foreign exchange rates. 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. Unique property subscription listings that are removed from property managers' accounts and subsequently replaced with new subscription listings within the same property manager's account listings are not considered as renewals in our renewal rate calculation. HomeAway includes most brands in its calculation of renewal rate. Subscriptions to BedandBreakfast.com, Toprural.es and Bookabach.co.nz 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 and Google Analytics. HomeAway, Inc. Condensed Consolidated Statements of Operations(Unaudited, in thousands, except per share data) Three Months Ended March 31, 20142013 Revenue: Listing $ 87,332 $ 66,945 Other 18,350 12,519 Total revenue 105,682 79,464 Costs and expenses: Cost of revenue (exclusive of amortization shown separately below) 15,937 13,281 Product development 18,313 12,399 Sales and marketing 35,617 26,367 General and administrative 23,626 16,049 Amortization expense 3,274 3,180 Total costs and expenses 96,767 71,276 Operating income 8,915 8,188 Other income (expense): Interest income 164 243 Other expense, net: (2,535) (1,591) Total other income (expense) (2,371) (1,348) Income before income taxes 6,544 6,840 Income tax expense (2,388) (1,545) Net income 4,156 5,295 Less: Net loss attributable to noncontrolling interests (287) -- Net income attributable to HomeAway, Inc. $ 4,443 $ 5,295 Net income per share attributable to HomeAway, Inc.: Basic and diluted $ 0.05 $ 0.06 Weighted average number of shares outstanding: Basic 92,699 83,940 Diluted 96,295 86,492 HomeAway, Inc. Condensed Consolidated Balance Sheets (Unaudited, in thousands) March 31,December 31, 2014 2013 Assets Current assets: Cash and cash equivalents $ 656,601 $ 324,608 Short-term investments 113,889 66,798 Accounts receivable, net of allowance for doubtful accounts of $1,094 and $1,038 as of March 31, 2014 and December 31, 2013, respectively 26,097 20,375 Income tax receivable 4,101 3,340 Prepaid expenses and other current assets 8,968 7,702 Restricted cash 800 1,607 Deferred tax assets 8,314 8,146 Total current assets 818,770 432,576 Property and equipment, net 40,304 39,807 Goodwill 528,335 507,611 Intangible assets, net 85,664 80,665 Restricted cash 584 573 Deferred tax assets 1,353 1,120 Other non-current assets 18,459 18,320 Total assets $ 1,493,469 $ 1,080,672Liabilities and stockholders' equity Current liabilities: Accounts payable $ 6,627 $ 3,539 Income tax payable 2,006 1,992 Accrued expenses 56,895 54,625 Deferred revenue 179,614 151,991 Total current liabilities 245,142 212,147 Convertible senior notes, net 303,044 -- Deferred revenue, less current portion 2,845 2,983 Deferred tax liabilities 24,173 24,046 Other non-current liabilities 7,806 7,557 Total liabilities 583,010 246,733 Redeemable noncontrolling interests 10,302 10,584 Commitments and contingencies Stockholders' equity Common stock 9 9 Additional paid-in capital 976,101 908,632 Accumulated other comprehensive loss (1,857) (6,747) Accumulated deficit (74,096) (78,539) Total stockholders' equity 900,157 823,355 Total liabilities and stockholders' equity $ 1,493,469 $ 1,080,672 HomeAway, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) Three Months Ended March 31, 20142013 Cash flows from operating activities Net income $ 4,156 $ 5,295 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,763 3,044 Amortization of intangible assets 3,274 3,180 Amortization of premiums on securities and other 552 801 Stock-based compensation 10,221 7,456 Excess tax benefit from stock-based compensation (3,579) (1,358) Deferred income taxes (2,963) (1,218) Net realized/unrealized foreign exchange (gain) loss 1,758 (16) Realized loss on foreign currency forwards 616 1,259 Changes in operating assets and liabilities, net of assets and liabilities assumed in business combinations: Accounts receivable (5,409) (1,880) Income tax receivable (737) (347) Prepaid expenses and other assets (1,094) (1,378) Accounts payable 2,811 (258) Accrued expenses (3,982) (406) Income tax payable 3,576 (4) Deferred revenue 26,763 22,300 Other non-current liabilities 243 1,011 Net cash provided by operating activities 39,969 37,481Cash flows from investing activities Acquisition of businesses, net of cash acquired (16,766) -- Change in restricted cash 815 (247) Purchases of intangibles and other assets (193) (30) Purchases of non-marketable equity investment -- (3,667) Purchases of short-term investments (50,560) (62,713) Proceeds from maturities of marketable securities 2,787 15,000 Net settlement of foreign currency forwards (616) (1,259) Purchases of property and equipment (4,818) (5,505) Net cash used in investing activities (69,351) (58,421)Cash flows from financing activities Proceeds from borrowings on convertible senior notes, net 391,431 -- Proceeds from issuance of warrants 38,278 -- Purchase of convertible note hedge (85,853) -- Other financing activities (919) -- Proceeds from exercises of options to purchase common stock 13,947 19,539 Excess tax benefit from stock-based compensation 3,579 1,358 Net cash provided by financing activities 360,463 20,897 Effect of exchange rate changes on cash 912 (2,189) Net increase (decrease) in cash and cash equivalents 331,993 (2,232) Cash and cash equivalents at beginning of period 324,608 189,478 Cash and cash equivalents at end of period $ 656,601 $ 187,246 HomeAway, Inc. Schedule of Non-GAAP Reconciliations (Unaudited, in thousands) Three Months Ended March 31, 20142013 Net income attributable to HomeAway, Inc. $ 4,443 $ 5,295 Add: Depreciation and amortization 7,037 6,224 Stock-based compensation 10,221 7,456 Interest income (164) (243) Foreign exchange expense 2,521 1,535 Income tax expense 2,388 1,545 Net loss attributable to noncontrolling interests (287) -- Adjusted EBITDA $ 26,159 $ 21,812 Three Months Ended March 31, 20142013 Cash provided by operating activities $ 39,969 $ 37,481 Excess tax benefit from stock-based compensation 3,579 1,358 Capital expenditures (4,818) (5,505) Free cash flow $ 38,730 $ 33,334 Three Months Ended March 31, 20142013 Net income attributable to HomeAway, Inc. $ 4,443 $ 5,295 Add: Stock-based compensation 10,221 7,456 Amortization expense 3,274 3,180 Related tax effect (4,723) (3,723) Impact on noncontrolling interests of non-GAAP adjustments (65) -- Non-GAAP net income $ 13,150 $ 12,208 HomeAway, Inc. Supplemental Financial Information (Unaudited, in thousands) Three Months Ended March 31, 20142013 Stock-based compensation: Cost of revenue $ 701 $ 845 Product development 2,714 1,727 Sales and marketing 2,172 1,608 General and administrative 4,634 3,276 Total $ 10,221 $ 7,456 Three Months Ended March 31, 20142013 Depreciation: Cost of revenue $ 1,100 $ 1,023 Product development 910 684 Sales and marketing 1,235 944 General and administrative 518 393 Total $ 3,763 $ 3,044 CONTACT: Investor Contact: Jen Ford Director, Investor Relations, HomeAway, Inc. (512) 505-1751 [email protected] Media Contact: Eileen Buesing VP of Communications, HomeAway, Inc. (512) 493-0375 [email protected] Source: HomeAway Inc. 2014 GlobeNewswire, Inc. |