Expedia Inc. Reports December Quarter Financial Results - 1
Expedia, Inc. Reports Record Revenue
and Earnings for December Quarter


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Expedia® takes lead in gross bookings among online travel agencies, with $704
million in December quarter; up 48% year-over-year
Earnings before non-cash and non-recurring items rose to $19 million, or 31 cents
per diluted share, up 25% sequentially and up from a loss of $3 million a year ago
Record revenue of $82 million rose 84% over year-earlier quarter; merchant
revenue rose 185% over year-earlier quarter; agency revenue rose 75% year over
year
BELLEVUE, Washington – January 28, 2002 – Expedia, Inc. (NASDAQ:
EXPE) today reported earnings before non-cash and non-recurring items of $19 million,
or 31 cents per diluted share, and reported that it took the lead in gross bookings among
online travel agencies with $704 million in gross bookings for the quarter ended Dec. 31,
2001.
The Company also reported record quarterly revenue of $82 million, an increase
of 84% over year-earlier revenue and 3% sequentially. Merchant revenue rose 185%
year-over-year to $34 million on the strength of sales of Expedia® Vacation packages
and Expedia® Special Rate hotels. Agency revenue rose 75% year-over-year and 8%
sequentially to $42 million. Total room nights booked in the quarter were more than 1.6
million, and stayed merchant room nights were approximately 1.18 million.
The Company reported net income for the quarter on a GAAP basis of $5 million,
or 8 cents per diluted share, on 62 million diluted shares, compared with a year-ago net
loss of $25 million, or 53 cents per share. In the year-ago period, the loss before noncash and non-recurring items was $3 million, or 6 cents per basic share.
Gross profit rose to $56 million, up 5% sequentially and 102% year-over-year.
Cash operating expenses declined by 5% sequentially and increased 17% year-over-year.
“The company performed very well this quarter achieving its longstanding goal of
becoming the market leader in gross travel sales while growing earnings simultaneously,”
Expedia Inc. Reports December Quarter Financial Results - 2
said Richard Barton, president and CEO of Expedia, Inc. “Our significant investments in
best-in-class technology, diversification, and disciplined marketing have begun to show
nicely in our results.”
Cash flow from operations in the quarter was $56 million. Expedia ended the
quarter with $238 million in cash, compared with $198 million as of Sept. 30.
In commenting on the most recent quarter, Gregory S. Stanger, senior vice
president and CFO, said, “We accomplished these record results in spite of the travel
slowdown caused by the economy and the events of September 11. Our results indicate
that we have put together a robust business model and a strong consumer brand that
enable us to weather business cycles.”
For the six months ended Dec. 31, Expedia reported net revenue of $161 million,
compared with $87 million in year-earlier period. Net income was about $500,000, or
1 cent per diluted share. Earnings before non-cash and non-recurring items was $34
million, or 55 cents per diluted share. In the six-month period ended Dec. 31, 2000, net
loss was $56 million, or $1.21 per basic share and the loss before non-cash items was $4
million, or 9 cents per basic share.
Expedia will shift to a calendar fiscal year following completion of the pending
transaction with USA Networks Inc. early in February. The following table summarizes
Expedia’s operating budget, based on a calendar fiscal year and including the effect of
the acquisition of Classic Custom Vacations, Inc. at the end of the first quarter.
Period
Revenue
Cash Earnings*
EBITDA**
Q1’02
$87
$14
$16
Q2’02
$116
$21
$23
Q3’02
$127
$24
$27
Q4’02
$120
$21
$25
CY’02
$450
$80
$91
In the March quarter, we expect to have a non-recurring charge for USA mergerrelated expenses of approximately $11 million.
Numerous factors affecting the travel industry, including world affairs, capacity
adjustments by airlines, changes in commission rates or fares by airlines or hotels, actions
Expedia Inc. Reports December Quarter Financial Results - 3
of existing and new competitors, trends in the overall economy, changes in the demand
for online and offline travel, and the inherent difficulty of making projections could cause
results to vary materially from these projections.
Recent technology and operating highlights:

Expedia announced earlier this month that it has agreed to acquire substantially all of
the assets and liabilities of Classic Custom Vacations, San Jose, Calif., in exchange
for a total of $52 million in cash and Expedia stock and the assumption of
approximately about $30 million in liabilities. Classic Custom Vacations is a leading
wholesaler of premiere vacation packages in destinations such as Hawaii, Mexico,
Europe and the Caribbean. CCV sold approximately $300 million in vacation
packages to travel agents in 2001.

Expedia.com started the new year with recognition as Yahoo! Internet Life's "Best
Overall Travel Site" and one of Mobile Computing & Communications' "Best Mobile
Web Sites of 2001." The honors praise Expedia for providing consumers with
attentive customer care and easy access to great deals.
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Also in January, Expedia introduced a visa and passport service to help travelers
understand, process and obtain necessary entry documents in a strategic alliance with
Express Visa Service, Inc. (EVS).

In December, Expedia announced that it successfully completed an annual assessment
by the privacy programs of TRUSTe and the Better Business Bureau Online
(BBBOnline), and passed an updated privacy audit from PricewaterhouseCoopers.
Expedia.com is the only travel site to garner these privacy reviews, which verify that
it is living up to all aspects of its privacy policy.

Expedia announces an enhanced marketing and financial relationship with US
Airways that adds US Airways' discount E-Savers and Internet-Only fares to
Expedia.com.

In early December 2001, a joint venture of Expedia, Inc. and SNCF, the leading
French state-owned railways group, launched www.voyages-sncf.com. The new site
enables European travelers to book flights, hotels, car rentals and vacation packages
in addition to rail tickets.
Additional financial information:

In July, USA Networks Inc. and Expedia announced an agreement for USA Networks
to acquire up to 37.5 million shares of Expedia stock. Shareholders will vote to
approve this transaction on Feb. 4 and Expedia expects the deal will close promptly
thereafter.
Expedia Inc. Reports December Quarter Financial Results - 4

In July, 2001, the Company adopted FASB 142, which requires companies to retain
goodwill from acquisitions on their balance sheets rather than amortizing it over a
period of time, subject to periodic review for impairment.
About Expedia, Inc.
Expedia, Inc. (Nasdaq: EXPE) operates the Expedia.com® online travel service in
the United States with localized versions for travelers in Canada, Germany, the United
Kingdom, Italy and the Netherlands. Travelscape, Inc., wholly owned by Expedia,
operates the WWTE (Worldwide Travel Exchange), a private-label online travel business
that supplies car and hotel inventory to third parties. To help customers travel right,
Expedia provides the best combination of air, car, and hotel booking, vacation package
and cruise offers, destination information and point-to-point mapping.
Notes on Attached Exhibits
 Exhibit 1 outlines the December 31, 2001, Statements of Operations for Expedia,
Inc. after consolidation of our subsidiaries as compared with the prior-year
numbers.

Exhibit 2 outlines key operating metrics for Expedia, Inc. and its subsidiaries.

Exhibit 3 presents a condensed balance sheet.
* Earnings before non-cash and non-recurring items is net income minus (1)
amortization of intangibles and non-cash distribution and marketing expense, (2) the
recognition of stock-based compensation and (3) non-recurring USAI merger-related
expense.
** EBITDA is defined as net income plus, (1) provision for income taxes, if any, (2)
minority interest, (3) net interest income and other, (4) depreciation and amortization, (5)
amortization of non-cash distribution and marketing expense and stock-based
compensation, and (6) non-recurring USAI merger-related expense.
####
This press release contains forward-looking statements relating to future events or future financial performance that involve risks and
uncertainties. Such statements can be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or comparable terms. These statements are
only predictions and actual results could differ materially from those anticipated in these statements based upon a number of factors
including final adjustments made in closing the quarter and those identified in the Company’s filings with the SEC.
Expedia, Expedia.com, the Expedia logo, Travelscape.com, and VacationSpot.com are either registered trademarks or trademarks of
Expedia, Inc. in the U.S., Canada and/or other countries. The names of actual companies and products mentioned herein may be
trademarks of their respective owners.
For investor information about Expedia, Inc.:
Marj Charlier, Director of Investor Relations, (425) 564-7666
or call our Investor Relations team at (425) 564-7233
For more information, press only:
Expedia Inc. Reports December Quarter Financial Results - 5
Darcy Bretz, Edelman Public Relations, (312) 240-2619
darcy.bretz@edelman.com or visit http://expedia.com/daily/press
Expedia Inc. Reports December Quarter Financial Results - 6
Exhibit 1
Statements of Operations
Expedia, Inc.
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Dec. 31
Dec. 31
2000
2001
Revenues:
Agency
Merchant (A)
Advertising and other
Total revenues
$
Six Months Ended
Dec. 31
Dec. 31
2000
2001
24,092 $
12,033
8,294
44,419
42,266
34,321
5,175
81,762
11,475
4,334
906
16,715
15,310
9,816
754
25,880
23,357
8,079
1,590
33,026
31,287
19,325
1,555
52,167
27,704
62.4%
55,882
68.3%
53,498
61.8%
109,073
67.6%
5,862
20,878
5,311
15,532
7,150
54,733
6,443
22,287
8,696
9,905
2,424
49,755
11,132
38,777
10,653
31,064
20,767
112,393
Income (loss) from operations
Net interest income and other
Share of Joint Venture net loss
Non-recurring charge - USAI merger-related expense
(27,029)
1,728
6,127
1,214
(769)
(1,350)
(58,895)
2,810
Pretax income (loss)
Provision for income taxes
(25,301)
-
5,222
-
(56,085)
-
472
-
Cost of revenues:
Agency
Merchant (A)
Advertising and other
Total cost of revenues
Gross profit
Gross profit %
Operating expenses:
Product development
Sales and marketing
General and administrative
Amortization of goodwill and intangibles
Recognition of stock-based compensation
Total operating expenses
-
$
45,738 $
24,368
16,418
86,524
-
81,545
68,423
11,272
161,240
13,652
48,358
14,877
19,809
5,988
102,684
6,389
2,543
(769)
(7,691)
Net income (loss)
$
(25,301) $
5,222
$
(56,085) $
472
Net income (loss) (excluding non-cash and non-recurring charges) (B)
$
(2,619) $
18,901
$
(4,254) $
33,960
EBITDA
$
(2,872) $
22,205
$
(5,034) $
38,579
Net income (loss) per share:
Basic
Diluted
$
(0.53) $
n/a $
0.10
0.08
$
(1.21) $
n/a $
0.01
0.01
Net income (loss) excluding non-cash and non-recurring charges per share:
Basic
Diluted
$
(0.06) $
n/a $
0.36
0.31
$
(0.09) $
n/a $
0.66
0.55
EBITDA per share:
Basic
Diluted
$
(0.06) $
n/a $
0.43
0.36
$
(0.11) $
n/a $
0.75
0.62
Weighted average # of shares outstanding:
Basic
47,453
Diluted
(A)
(B)
(C)
Merchant amounts are reported on a net basis and all prior periods have been
adjusted.
Excludes the amortization of goodwill and intangibles, the recognition of stockbased compensation and non-recurring USAI merger-related expense.
EBITDA is defined as net income plus, (1) provision for income taxes, if any,
(2) minority interest, (3) net interest income and other, (4) depreciation and
amortization, (5) amortization of non-cash distribution and marketing expense and
stock-based compensation, and (6) non-recurring USAI merger-related expense.
n/a
52,010
61,945
46,350
n/a
51,171
62,192
Expedia Inc. Reports December Quarter Financial Results - 7
Exhibit 2
Key Operating Metrics
(In Thousands)
(unaudited)
Three Months Ended:
Jun. 30, 2000
Sep. 30, 2000
Dec. 31, 2000
Mar. 31, 2001
Jun. 30, 2001
Sep. 30, 2001
Dec. 31, 2001
$450,000
$467,000
$475,000
$674,000
$802,000
$723,000
$704,000
Total Transactions (B)
1,186
1,306
1,318
1,780
2,241
2,222
2,229
Average monthly Media Metrix reach (C)
6,819
6,389
5,417
6,969
7,502
9,410
9,238
Total gross bookings (A)
Expedia.com conversion (D)
Expedia new purchasing customers (E)
Expedia cumulative purchasing customers (F)
Expedia quarterly unique purchasing customers (G)
4.1%
447
1,965
670
4.8%
463
2,428
741
6.0%
504
2,932
790
5.7%
671
3,603
1,007
7.0%
904
4,507
1,336
(A) Gross bookings represents the total value of travel booked through the Expedia, VacationSpot, and WWTE sites.
(B) Transactions represents the number of reservations and purchases transacted through the Expedia and WWTE sites.
(C) Average monthly Media Metrix reach represents the unduplicated reach for the Expedia and VacationSpot sites.
(D) Conversion represents the monthly average Expedia.com unique monthly purchasers divided by the monthly average Media Metrix reach for the Expedia.com site.
(E) Expedia new purchasing customers represents the number of new customers transacting through the Expedia sites in a quarter.
(F) Expedia cumulative purchasing customers represents the cumulative number of customers that have ever transacted through the Expedia sites as of the end of a quarter.
(G) Expedia quarterly unique purchasing customers represents the number of unique customers transacting through the Expedia sites over the course of a quarter.
5.5%
918
5,424
1,393
5.2%
870
6,294
1,383
Expedia Inc. Reports December Quarter Financial Results - 8
Exhibit 3
Selected Balance Sheet Items
Expedia, Inc.
(in thousands)
(unaudited)
Jun. 30,
2001
Cash and cash equivalents
Prepaid merchant bookings (A)
Other current assets
Total current assets
Property and equipment, net
Investments and restricted deposits
Goodwill and intangible assets, net
Total assets
Accounts payable and accrued expenses
Deferred merchant bookings (B)
Notes payable
Other current liabilities
Total liabilities
Stockholders' equity
Total liabilities and stockholders' equity
$
182,161
30,170
41,358
253,689
16,778
1,298
118,079
389,844
74,825
80,326
1,348
2,346
158,845
230,999
389,844
(A) Represents prepayment of merchant ticket costs to the airlines.
(B) Represents receipt of payments from customers prior to the travel date.
Dec. 31,
2001
$
238,374
8,726
24,841
271,941
21,447
12,897
98,270
404,555
98,395
52,965
4,094
155,454
249,101
404,555