Expedia Group Inc. (NASDAQ:EXPE)

The financial analysis over the five-year period reveals several notable trends in the company's performance metrics and their implications.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited a generally increasing trend from 2017 to 2019, rising from $1,026 million to $1,922 million. However, there was a significant decline in 2020, where NOPAT turned negative, registering a loss of $5,503 million. This sharp drop may indicate extraordinary challenges or operational disruptions during that period. In 2021, the NOPAT recovered substantially to $2,614 million, signaling a rebound in operational profitability.

Cost of Capital

The cost of capital remained relatively stable over the years, fluctuating within a narrow range from 15.5% to 17.98%. The highest cost was recorded in 2018 at 17.98%, and the lowest in 2020 at 15.5%, potentially reflecting market conditions or changes in the company's risk profile during those years. The consistent cost of capital suggests a stable expectation of return by investors overall.

Invested Capital

Invested capital showed a progressive increase over the period, rising from $14,039 million in 2017 to $17,498 million in 2021. This upward trend indicates ongoing investment in assets or operations, albeit with a slight dip in 2020, which might relate to operational adjustments or asset revaluation during that year.

Economic Profit

Economic profit, calculated as NOPAT minus the cost of capital charge on invested capital, was negative throughout all observed years. Although losses decreased from $1,342 million in 2017 to $792 million in 2019, there was a dramatic increase in losses in 2020, reaching $7,946 million, aligning with the significant negative NOPAT in the same year. By 2021, the economic loss reduced to $335 million, showing improvement but still indicating the company did not create value beyond its cost of capital. The persistent negative economic profits highlight potential issues with generating returns exceeding capital costs during the period.

In summary, the data indicate a period of growing operational profitability and invested capital until 2019, followed by a severe downturn in 2020 with strong recovery signs in 2021. Despite the recovery, the company has consistently experienced economic losses, which implies that the returns have not sufficiently exceeded the capital costs during these years. Attention to improving profitability relative to invested capital and managing capital costs may be necessary to enhance value creation going forward.

The financial data reveals significant fluctuations in profitability over the analyzed periods.

Net Income (Loss) Attributable to Expedia Group, Inc.

The company experienced positive net income from 2017 through 2019, with values steadily increasing from 378 million USD in 2017 to 565 million USD in 2019. In 2020, there was a sharp and substantial loss of 2,612 million USD, indicating a major adverse impact on profitability. The net income slightly recovered in 2021, recording a marginal profit of 12 million USD, which suggests a fragile rebound but still far below pre-2020 levels.

Net Operating Profit After Taxes (NOPAT)

This metric exhibits a similar trend to net income, with continuous growth from 1,026 million USD in 2017 to 1,922 million USD in 2019. The year 2020 marked a deep negative NOPAT of 5,503 million USD, underscoring the operational difficulties faced during this period. In 2021, there was a notable improvement with NOPAT returning to a positive figure of 2,614 million USD, surpassing pre-pandemic levels, which may reflect operational recovery and enhanced efficiency or cost management.

Overall, the data illustrates strong growth in profitability through 2019, a severe downturn in 2020 presumably linked to extraordinary circumstances, followed by partial to full recovery across key profit measures in 2021. The divergence in magnitude of loss between net income and NOPAT in 2020 highlights the scale of operational and possibly non-operational challenges during that year.

The analysis of the provided financial data indicates noteworthy fluctuations in the income tax expense (benefit) and cash operating taxes over the observed five-year period.

Income Tax Expense (Benefit)

The income tax expense exhibits a rising trend from 2017 through 2019, increasing from 45 million USD to 203 million USD. However, this trend reverses strongly in 2020, with the figure turning negative to -423 million USD, indicating a tax benefit rather than an expense. In 2021, the amount remains negative but with a reduced benefit of -53 million USD. This significant shift in 2020 and 2021 reflects either substantial tax credits, loss carrybacks, or other tax relief measures impacting the income tax recorded.

Cash Operating Taxes

Cash operating taxes increase sharply from 212 million USD in 2017 to 427 million USD in 2018, followed by a decline to 323 million USD in 2019. The downward trend continues in 2020, dropping to 142 million USD, and then slightly recovers to 167 million USD in 2021. This pattern suggests a peak in cash outflows related to taxes in 2018, with subsequent moderation likely due to operational changes or tax planning strategies.

Overall, the data reveals contrasting movements between reported income tax expense and actual cash tax payments, especially notable in 2020 when the income tax expense turns into a substantial benefit while cash taxes paid decrease markedly. This divergence may indicate changes in accounting treatment or timing differences between tax expense recognition and cash tax payments.

The presented financial data reveals several notable trends over the five-year period from 2017 to 2021.

Total Reported Debt & Leases

There is an overall increasing trend in total reported debt and leases, rising from $4,941 million in 2017 to $8,887 million by the end of 2021. Notably, the increase between 2019 ($5,589 million) and 2020 ($8,855 million) is substantial, indicating a significant rise in leverage during that period, which then stabilizes into 2021.

Total Stockholders’ Equity

Total stockholders' equity shows a declining trend over the same period. Starting at $4,522 million in 2017, it decreases somewhat gradually to $3,967 million in 2019, followed by a sharper decline to $2,532 million in 2020 and then further to $2,057 million in 2021. This decreasing equity trend suggests potential erosion of shareholder value or increased liabilities relative to assets.

Invested Capital

Invested capital remains relatively steady between 2017 and 2020, fluctuating mildly from $14,039 million in 2017 to $15,765 million in 2020. However, a noticeable increase occurs in 2021, reaching $17,498 million. This rise may reflect accumulated investments, retained earnings, or other capital inputs despite the reduction in equity.

In summary, the financial structure indicates rising debt levels alongside falling equity, which could imply increased financial risk or strategic leveraging. The increase in invested capital alongside these changes indicates ongoing commitments to assets or operations. These trends warrant further investigation into the underlying causes, such as capital expenditures, income performance, or financing activities, to comprehensively assess financial health and risk exposure.

Economic Profit

The economic profit demonstrated significant fluctuations over the analyzed period. Initially, it was negative at -1,342 million US dollars in 2017, improving slightly to -1,244 million in 2018 and further to -792 million in 2019. However, 2020 exhibited a substantial deterioration, with economic profit plunging to -7,946 million, indicating a sharp decline in profitability or increased losses. By 2021, there was a notable recovery to -335 million, suggesting an improvement but still remaining in negative territory.

Invested Capital

Invested capital showed a steady upward trend throughout the five years. It increased from 14,039 million US dollars in 2017 to 14,424 million in 2018, followed by a more pronounced growth to 16,161 million in 2019. There was a slight decline to 15,765 million in 2020, which may correlate with the adverse economic conditions reflected in economic profit. In 2021, invested capital resumed growth, reaching its highest level of 17,498 million.

Economic Spread Ratio

The economic spread ratio remained negative over the period, reflecting that the returns on invested capital were below the cost of capital. In 2017, the ratio was -9.56%, improving slightly to -8.62% in 2018 and further to -4.9% in 2019. In 2020, the ratio deteriorated drastically to -50.41%, a significant decline aligned with the sharp drop in economic profit. The ratio improved markedly in 2021 to -1.92%, indicating a recovery in operational performance though still below break-even.

The financial data reveals significant fluctuations in key performance indicators over the analyzed periods.

Economic Profit

Economic profit demonstrates a negative trend throughout the years, indicating persistent losses. Although the losses decreased from -1342 million US$ in 2017 to -792 million US$ in 2019, a drastic deterioration occurred in 2020, with economic profit plunging to -7946 million US$. This substantial decline likely reflects extraordinary negative impacts during that period. In 2021, there is a notable recovery, with the economic loss reducing sharply to -335 million US$, approaching a break-even position.

Adjusted Revenue

Adjusted revenue shows an overall rising trajectory from 2017 to 2019, increasing from approximately 10.7 billion US$ to 13.4 billion US$. However, there is a sharp drop in 2020, falling to about 2.5 billion US$, which indicates a significant contraction in revenue streams during that year. In 2021, revenue rebounded impressively to around 11.2 billion US$, almost recovering to pre-2020 levels, which suggests a strong recovery phase.

Economic Profit Margin

The economic profit margin mirrors the trends seen in economic profit. It improved (became less negative) from -12.53% in 2017 to -5.92% in 2019, indicating enhanced profitability margins prior to 2020. In 2020, the margin deteriorated drastically to -320.68%, consistent with the sharp decline in economic profit and revenue, signaling significantly impairing factors during that year. By 2021, the margin improved substantially to -3%, indicating a return toward profitability, albeit still negative.

In summary, the data reflects a period of initial improvement in profitability and revenue from 2017 through 2019, followed by an extraordinary downturn in 2020, likely related to external adverse events affecting operational performance severely. The subsequent year shows recovery trends, with revenue and profitability indicators improving notably, but the company has not yet achieved positive economic profit or margin by the end of 2021.