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Orbitz crashes due to EPS miss guidance, Expedia and Travelzoo slightly lower

  • In addition to missing Q3 EPS estimates (while slightly beating on revenue), Orbitz (OWW -18.1%) is now guiding for 2013 revenue of $840M and adjusted EBITDA growth of 9%-10%. The former is below an $849.4M consensus, and the latter suggests adjusted EBITDA growth is set to reverse course in Q4 after growing at an 18% clip over the first nine months of 2013.
  • Orbitz's gross bookings rose 5% Y/Y in Q3, slightly better than Q2's 4% clip. Net revenue margin (the ratio of revenue to bookings) was 8%, +50 bps Y/Y. But free cash flow (tends to be lumpy) was -$39.6M vs. $20.2M in Q2 and -$13M a year ago.
  • Standalone air revenue -4% Y/Y, standalone hotel rooms +36%, vacation packages +12%, ads/media -4%, everything else -2%. Gross margin rose 160 bps Y/Y to 82.3%, but SG&A grew to make up 30.6% of revenue (+180 bps), and marketing spend totaled 33.3% of revenue (+170 bps). Online travel firms large and small have been spending aggressively on search keywords.
  • Domestic revenue (72% of total) +12% Y/Y, international +9%.
  • Expedia (EXPE -1.1%) and Travelzoo (TZOO -1.8%), both of whom also have strong U.S. exposure, are off moderately. Today's Orbitz plunge contrasts sharply with the huge gains the company saw following its Q2 report.
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