HOMEAWAY INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - HOMEAWAY INC	d623754d8k.htm

Exhibit 99.1


FOR IMMEDIATE RELEASE

HomeAway, Inc. Reports Third Quarter 2013 Financial Results

– Total revenue of $90.1 million, up 23.3% year-over-year

– Adjusted EBITDA of $29.0 million, up 19.8% year-over-year

– TTM Free cash flow generation of $91.5 million, up 16.9% year-over-year

Austin, Texas – November 6, 2013 – HomeAway, Inc. (NASDAQ: AWAY), the world’s leading online marketplace for the vacation rental industry, today reported its financial results for the third quarter ended September 30, 2013.

Management Commentary

“The second half of 2013 is proving to be a very exciting time for HomeAway. In particular, the third quarter marked several advancements in pursuit of accelerating growth in listings and improving competitive positioning,” says Brian Sharples, chief executive officer of HomeAway. “At the core of our business, HomeAway aims to be the most efficient online marketing channel for vacation rental owners and managers. With this in mind, we were thrilled to introduce our new pay-per-booking product during the quarter, providing HomeAway the opportunity to appeal to an even wider contingent of property owners and managers seeking to rent vacation properties on a short-term basis, test the marketplace or better manage their cash flows. We are very pleased with the initial response of pay-per-booking, which we expect to meaningfully contribute to revenue growth over the next several years.”

Third Quarter 2013 Financial Highlights

•

Total revenue increased 23.3% to $90.1 million from $73.1 million in the third quarter of 2012. On an FX neutral basis, year-over-year revenue growth was 22.0%. 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 service revenue.

•

Listing revenue increased 23.0% to $75.5 million from $61.4 million in the third quarter of 2012. On an FX neutral basis, year-over-year listing revenue growth was 21.5%.

•

Other revenue, which is comprised of ancillary revenue from owners and travelers, advertising, software and other items, increased 24.8% to $14.7 million from $11.7 million in the third quarter of 2012. Growth in other revenue primarily reflected the introduction and enhanced distribution of value-added owner, manager and traveler products.

•

Adjusted EBITDA increased 19.8% to $29.0 million from $24.2 million in the third quarter of 2012. As a percentage of revenue, adjusted EBITDA was 32.2%.

•

Free cash flow decreased 0.7% to $17.0 million from $17.2 million in the third quarter of 2012.

•

Net income attributable to HomeAway was $8.5 million, or $0.10 per diluted share, compared to net income attributable to HomeAway of $5.2 million, or $0.06 per diluted share, in the third quarter of 2012.

•

Non-GAAP net income was $16.7 million, or $0.19 per diluted share, compared to non-GAAP net income of $12.1 million, or $0.14 per diluted share, in the third quarter of 2012.

•

Cash, cash equivalents and short-term investments as of September 30, 2013 were $352.4 million, or approximately $4.00 per diluted share.

Key Business Metrics

•

Paid listings at the end of the third quarter were 773,352, a year-over-year increase of 7.4% from 720,031 at the end of the third quarter of 2012.

•

Average revenue per listing during the third quarter was $390, a 15.7% increase from $337 during the third quarter of 2012. Excluding the impact of FX and pay-per-lead listings, average revenue per subscription listing increased 15.3% year-over-year.

•

Renewal rate was 71.7% at the end of the third quarter, compared to 74.5% at the end of the third quarter of 2012 and 72.4% at the end of the second quarter of 2013.

•

Visits were 198 million during the third quarter, a year-over-year increase of 27%. During the fourth quarter of 2012, HomeAway began using a different tool for the measurement of visits for certain of its websites. On a comparable basis, HomeAway estimates that visits would have increased by 19% year-over-year.

Note: The recent ability of customers to consolidate listings and to purchase network product bundles impacts comparability of HomeAway’s previously reported metrics for the third quarter of 2013, and for future periods. Absent this change, HomeAway estimates for the third quarter of 2013:

•

Year-over-year paid listings growth would have been approximately 12.7%;

•

Average revenue per listing would have been $372 and when excluding the impact of the same adjustments for consolidated listings and new bundled offerings, in addition to FX and pay-per-lead listings, average revenue per subscription listing would have been up 9.6% year-over-year; and

•

Renewal rate would have been 74.2%, compared to 74.5% at the end of the third quarter of 2012 and 74.5% at the end of the second quarter of 2013.

Business Outlook

HomeAway management currently expects to achieve the following results for fourth quarter and full year ending December 31, 2013:

Fourth Quarter 2013

•

Total revenue is expected to be in the range of $85.5 to $86.5 million.

•

Adjusted EBITDA is expected to be in the range of $22.6 to $23.1 million.

Full Year 2013

•

Total revenue is expected to be in the range of $341.7 to $342.7 million.

•

Adjusted EBITDA is expected to be in the range of $98.3 to $98.8 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 its third quarter 2013 results today 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) 407-0784, passcode 10000674. Callers outside the United States and Canada should join by dialing (201) 689-8560, passcode 10000674. 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.

A brief presentation, to accompany today’s discussion, will be accessible through the webcast.

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 November 6, 2013 until 11:59 p.m. Eastern Time / 10:59 p.m. Central Time on November 20, 2013 by dialing (877) 870-5176, passcode 10000674, in the United States and Canada or (858) 384-5517 outside the United States and Canada, passcode 10000674.

About HomeAway

HomeAway, Inc. based in Austin, Texas, the world’s leading online marketplace for the vacation rental industry, with sites representing over 773,000 paid listings of vacation rental homes in 171 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 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; future opportunity; and the effect of its pay-per-booking model on revenue.

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-Q, filed on July 31, 2013. 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 and non-GAAP net income. Adjusted EBITDA, free cash flow and non-GAAP net income 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 an effective 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 the effective tax rate of 35% related to ongoing operations.

HomeAway management believes that the use of Adjusted EBITDA, free cash flow and non-GAAP net income are useful to investors in evaluating its operating performance for the following reasons:

•

HomeAway management uses Adjusted EBITDA, free cash flow and non-GAAP net income 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 and non-GAAP net income 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 and non-GAAP net income 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 and non-GAAP net income; and

•

Adjusted EBITDA and non-GAAP net income excludes 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 and non-GAAP net income 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 or non-GAAP net income 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 and non-GAAP net income 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

A paid listing is defined by HomeAway as a fee to list a property advertisement on one or more websites in its marketplace. A paid listing allows a property owner or manager to include a description of the property, along with location, pricing, availability, a specified number of photos and contact information. Most listings are sold on a subscription basis, and some listing packages may include listings on more than one of HomeAway’s websites. When purchased at the same time in one bundle, HomeAway counts this as one paid listing. Listings are also sold on a pay-for-performance basis to property managers.

Average revenue per listing is computed by HomeAway as listing revenue for the period divided by the average of paid 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; changes in brand and listing type mix; and the impact of foreign exchange rates on HomeAway’s listing revenue outside of the United States.

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 and Toprural.es 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 September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenue:
Listing	$	75,498		$	61,392		$	215,593		$	175,601
Other		14,650			11,736			40,627			33,246

Total revenue		90,148			73,128			256,220			208,847
Costs and expenses:
Cost of revenue (exclusive of amortization shown separately below)		13,322			11,278			40,448			33,105
Product development		15,193			11,034			42,033			31,060
Sales and marketing		28,561			22,492			83,795			71,300
General and administrative		17,525			14,547			51,643			42,036
Amortization expense		2,730			3,298			8,905			9,028

Total costs and expenses		77,331			62,649			226,824			186,529

Operating income		12,817			10,479			29,396			22,318
Other income (expense):
Interest income		306			275			848			684
Other income (expense):		(458	)		109			(1,983	)		(2,201	)

Total other income (expense)		(152	)		384			(1,135	)		(1,517	)

Income before income taxes		12,665			10,863			28,261			20,801
Income tax expense		(4,312	)		(5,708	)		(9,143	)		(10,389	)

Net income		8,353			5,155			19,118			10,412
Net loss attributable to noncontrolling interests		(125	)		—			(125	)		—

Net income attributable to HomeAway, Inc.	$	8,478		$	5,155		$	19,243		$	10,412

Net income per share attributable to HomeAway, Inc.:
Basic	$	0.10		$	0.06		$	0.23		$	0.13
Diluted	$	0.10		$	0.06		$	0.22		$	0.12

Weighted average number of shares outstanding:
Basic		85,452			82,686			84,805			82,107
Diluted		88,215			85,043			87,738			84,811

HomeAway, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)


	September 30,			December 31,
	2013			2012
Assets
Current assets:
Cash and cash equivalents	$	192,395		$	189,478
Short-term investments		160,044			80,330
Accounts receivable, net of allowance for doubtful accounts of $847 and $633 as of September 30, 2013 and December 31, 2012, respectively		17,373			16,343
Income tax receivable		2,315			775
Prepaid expenses and other current assets		9,359			7,312
Restricted cash		183			284
Deferred tax assets		5,455			5,425

Total current assets		387,124			299,947
Property and equipment, net		37,294			32,901
Goodwill		330,340			312,412
Intangible assets, net		56,691			59,727
Restricted cash		576			230
Deferred tax assets		578			1,807
Other non-current assets		18,632			15,651

Total assets	$	831,235		$	722,675

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,949		$	6,613
Income tax payable		114			11,137
Accrued expenses		38,763			33,856
Deferred revenue		149,052			126,351

Total current liabilities		192,878			177,957
Deferred revenue, less current portion		2,636			2,879
Deferred tax liabilities		16,258			17,615
Other non-current liabilities		8,654			7,191

Total liabilities		220,426			205,642

Redeemable noncontrolling interests		8,757			—
Commitments and contingencies
Stockholders’ equity
Common stock		9			8
Additional paid-in capital		684,103			618,700
Accumulated other comprehensive loss		(5,078	)		(5,450	)
Accumulated deficit		(76,982	)		(96,225	)

Total stockholders’ equity		602,052			517,033

Total liabilities and stockholders’ equity	$	831,235		$	722,675

HomeAway, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Nine Months
	Ended September 30,
	2013			2012
Cash flows from operating activities
Net income	$	19,118		$	10,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,835			8,037
Amortization of intangible assets		8,905			9,028
Amortization of premiums on securities and other		3,102			1,827
Stock-based compensation		27,589			19,556
Excess tax benefit from stock-based compensation		(6,237	)		(7,344	)
Deferred income taxes		(833	)		(3,726	)
Net realized/unrealized foreign exchange (gain) loss		665			(43	)
Realized loss on foreign currency forwards		861			1,910
Changes in operating assets and liabilities, net of assets and liabilities assumed in business combinations:
Accounts receivable		(577	)		235
Income tax receivable		(1,399	)		75
Prepaid expenses and other assets		(1,557	)		(6,369	)
Accounts payable		(1,740	)		1,766
Accrued expenses		2,982			2,584
Income tax payable		(4,708	)		7,747
Deferred revenue		21,023			21,939
Other non-current liabilities		967			3,017

Net cash provided by operating activities		77,996			70,651

Cash flows from investing activities
Acquisition of businesses, net of cash acquired		(11,620	)		(16,207	)
Change in restricted cash		(248	)		757
Purchases of intangibles and other assets		(576	)		(243	)
Purchases of non-marketable equity investment		(3,667	)		(6,446	)
Purchases of short-term investments		(120,103	)		(47,392	)
Proceeds from maturities and redemptions of marketable securities		37,100			28,418
Net settlement of foreign currency forwards		(861	)		(1,910	)
Purchases of property and equipment		(14,661	)		(14,641	)

Net cash used in investing activities		(114,636	)		(57,664	)

Cash flows from financing activities
Proceeds from exercises of options to purchase common stock		31,578			21,984
Excess tax benefit from stock-based compensation		6,237			7,344

Net cash provided by financing activities		37,815			29,328

Effect of exchange rate changes on cash		1,742			414

Net increase in cash and cash equivalents		2,917			42,729
Cash and cash equivalents at beginning of period		189,478			118,208

Cash and cash equivalents at end of period	$	192,395		$	160,937

HomeAway, Inc.

Schedule of Non-GAAP Reconciliations

(Unaudited, in thousands)


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2013			2012			2013			2012
Net income attributable to HomeAway, Inc.	$	8,478		$	5,155		$	19,243		$	10,412
Add:
Depreciation and amortization		6,208			6,246			18,740			17,065
Stock-based compensation		9,997			7,410			27,589			19,556
Interest income		(306	)		(275	)		(848	)		(684	)
Foreign exchange (income) expense		482			(7	)		1,950			2,285
Income tax expense		4,312			5,708			9,143			10,389
Net loss attributable to noncontrolling interests		(125	)		—			(125	)		—

Adjusted EBITDA	$	29,046		$	24,237		$	75,692		$	59,023


	Three Months						Nine Months
	Ended September 30,						Ended June 30,
	2013			2012			2013			2012
Cash provided by operating activities	$	18,704		$	15,712		$	77,996		$	70,651
Excess tax benefit from stock-based compensation		1,992			4,814			6,237			7,344
Capital expenditures		(3,655	)		(3,369	)		(14,661	)		(14,641	)

Free cash flow	$	17,041		$	17,157		$	69,572		$	63,354


	Three Months						Nine Months
	Ended September 30,						Ended June 30,
	2013			2012			2013			2012
Net income attributable to HomeAway, Inc.	$	8,478		$	5,155		$	19,243		$	10,412
Add:
Stock-based compensation		9,997			7,410			27,589			19,556
Amortization expense		2,730			3,298			8,905			9,028
Related tax effect		(4,454	)		(3,747	)		(12,772	)		(10,004	)
Impact on noncontrolling interests of non-GAAP adjustments		(11	)		—			(11	)		—

Non-GAAP net income	$	16,740		$	12,116		$	42,954		$	28,992

HomeAway, Inc.

Supplemental Financial Information

(Unaudited, in thousands)


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2013		2012		2013		2012
Stock-based compensation:
Cost of revenue	$	720	$	831	$	2,392	$	1,742
Product development		2,515		1,538		6,743		3,973
Sales and marketing		2,349		1,654		6,235		4,963
General and administrative		4,413		3,387		12,219		8,878

Total	$	9,997	$	7,410	$	27,589	$	19,556


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2013		2012		2013		2012
Depreciation:
Cost of revenue	$	1,096	$	979	$	3,207	$	2,685
Product development		799		654		2,242		1,774
Sales and marketing		1,111		919		3,088		2,510
General and administrative		472		396		1,298		1,068

Total	$	3,478	$	2,948	$	9,835	$	8,037

Investor Contact:

HomeAway Investor Relations

(512) 505-1700

investors@homeaway.com

or Addo Communications at (310) 829-5400

Media Contact:

Victor Wang Public Relations Manager, HomeAway, Inc.

(512)505-1504

vwang@homeaway.com

###

HOMEAWAY INC - FORM 8-K - EX-99.1 - November 6, 2013

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