Analyst: Expedia Group revenue could drop by $470M (18%) in Q1 amid coronavirus outbreak

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Citing the uncertainty in global travel amid the novel coronavirus outbreak, a veteran Wall Street analyst issued lower estimates for Expedia Group’s key financial results, predicting a decline of 18 percent, or more than $470 million, in the company’s first quarter revenue vs. the same period last year.

“We are lowering our estimates across the board given Expedia’s outsized exposure to North American and European travel markets, whose outlooks have materially deteriorated since the global outbreak of the novel coronavirus,” wrote analyst Mark Mahaney of RBC Capital Markets in a report to clients on Tuesday afternoon.

Mahaney expects the company to post revenue of $2.14 billion for the first quarter, compared with $2.6 billion in the first quarter of last year. He had previously been expecting the company’s quarterly revenue to rise to more than $2.7 billion.

The numbers underscore the challenge facing the Seattle-based online travel giant, which is being led by chairman Barry Diller after the ouster of its CEO and CFO.

Expedia Group is one of many travel and tourism companies facing extraordinary circumstances amid the spread of novel coronavirus and the resulting respiratory disease, COVID-19, including airlines, hotels, resorts, conventions and others.

Expedia chairman Barry Diller. (World Travel & Tourism Council Photo, via Flickr, Creative Commons 2.0)

One of Expedia’s biggest rivals, Booking Holdings, withdrew its previously issued guidance on Monday, but its CEO Glenn Fogel expressed long-term optimism: “While the full impact and duration of the COVID-19 outbreak is unknown at this time, we have been through travel disruptions in the past and expect that this disruption will ultimately be temporary.”

But the challenge comes at especially difficult time for Expedia Group: The company cut 3,000 jobs on Feb. 24, including 500 at its new Seattle waterfront headquarters, saying it had been “pursuing growth in an unhealthy and undisciplined way” and needed to refocus.

Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, HomeAway and many others, in addition to the flagship Expedia.com.

RBC now estimates that a key measure of Expedia Group’s profits (earnings before interest, taxes depreciation and amortization, or EBITDA) will be $65 million for the first quarter, down from $176 million in the same quarter a year earlier.

Expedia had indicated in February that it expected a $30 million to $40 million impact on EBITDA from the coronavirus outbreak, but that was in the middle of February, before the novel coronavirus had reached a global scale. The company has not issued further public comment on the financial impact of the coronavirus outbreak.

The company declined to issue its normal guidance when releasing its latest quarterly results, due to the uncertainty surrounding the coronavirus outbreak, but the company said it expected double-digit percentage growth in EBITDA for the full year 2020. In contrast, RBC now estimates that Expedia Group’s EBITDA for 2020 will be down slightly, or “flattish,” as Mahaney put it in the note.

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