HomeAway, Inc. Reports Third Quarter 2011 Financial Results

HomeAway, Inc. (NASDAQ: AWAY), the world’s largest online marketplace for vacation rentals, today reported its financial results for the third quarter ended September 30, 2011.

Management Commentary

“HomeAway’s impressive third quarter results continue to confirm and support our market leading position in the highly fragmented and underpenetrated global vacation rentals marketplace,” says Brian Sharples, Chief Executive Officer of HomeAway®. “We’ve continued to make meaningful strides in delivering against our financial, operational and strategic growth initiatives through ongoing investment in our core business and strong execution. During the third quarter, we attracted over 129 million visits to our network of sites and have delivered on our promise to further improve the monetization of the marketplace through the launch of tiered pricing and other ancillary services. Throughout the remainder of fiscal 2011 and beyond, we expect to continue to reap the benefits of our strong network effect by attracting new travelers to our platform and driving continued growth in paid listings.”

Third Quarter 2011 Financial Highlights

  • Total revenue increased 36.9% to $61.1 million from $44.6 million in the third quarter of 2010. Growth in total revenue was driven by continued strength in renewal rates and increased revenue per listing from the prior year.
  • Listing revenue increased 29.2% to $52.5 million from $40.6 million in the third quarter of 2010.
  • Adjusted EBITDA increased 36.5% to $21.6 million from $15.9 million in the third quarter of 2010. For the third quarter of 2011, Adjusted EBITDA, as a percentage of revenue, was 35.4%, consistent with that of the third quarter of 2010.
  • Free cash flow increased 64.0% to $13.9 million from $8.5 million in the third quarter of 2010. On a trailing twelve month basis, free cash flow increased 40.0% to $61.5 million from $44.0 million in the comparable trailing twelve month period for the prior year.
  • Net loss attributable to common stockholders was $4.1 million, or ($0.05) per diluted share compared to a net loss of ($0.11) per diluted share in the third quarter of 2010. This measure per diluted share includes the impact of cumulative preferred stock dividends and discount accretion of $6.8 million, or ($0.09) per share, in 2011 and $8.9 million, or ($0.23) per share, in 2010. As of September 30, 2011, the Company no longer has any preferred stock outstanding.
  • Cash, cash equivalents and short-term investments as of September 30, 2011 were $172.1 million.

Third Quarter 2011 Business Highlights

  • Launch of pay-for-performance pricing on HomeAway.com, enabling users to pay more to rank higher in search results. The tiered pricing model has already shown positive initial results and is anticipated to further increase average revenue per listing over time.
  • Migration of HomeAway’s French website, Abritel.fr, to the HomeAway network platform as part of the ongoing network consolidation efforts towards achieving a single technology platform.
  • Initiation of bundled pricing in the United Kingdom, allowing property owners and managers to purchase listings simultaneously on HomeAway.co.uk, the home of Holiday-Rentals®, and OwnersDirect.co.uk for one bundled price.
  • Completion of the first full quarter with the Reservation Manager product on two of HomeAway’s leading websites, HomeAway.com and VRBO.com. Reservation Manager helps property owners and managers to streamline the inquiry and payments processes and to accept credit cards and eChecks through a secure and automated process, as well as permits travelers to pay online through a trusted site.
  • Completion of the full rollout of the owner dashboard on VRBO.com, providing property owners and managers with improved efficiency and marketing opportunities.

Key Business Metrics

  • Paid listings were 626,528, compared to 511,667 at the end of the third quarter of 2010 and 626,661 at the end of the second quarter of 2011. Paid listings increased 22.4% year-over-year and were consistent with the second quarter of 2011, reflecting the expected seasonality.
  • Average revenue per listing was $335, compared to $314 during the third quarter of 2010 and $339 during the second quarter of 2011. The Australian business, which was acquired in the second quarter of 2011, generates a lower average revenue per listing.
  • Renewal rate was 76.4%, compared to 75.4% at the end of the third quarter of 2010 and 76.2% at the end of the second quarter of 2011.
  • Visits were 129.1 million, according to the Company’s internal metrics, an increase of 23.2% year-over-year. According to ComScore, visits were 56.9 million, a decrease of 1.3% year-over-year.

Historical Quarterly Business Metrics
For the Three Months Ended:
March31, 2010 June30, 2010 September30, 2010 December 30,2010 March31, 2011 June30, 2011 September30, 2011
Average Revenue Per Listing $290 $298 $314 $311 $328 $339 $335
Paid Listings, end of period 498,895 525,187 511,667 527,535 575,166 626,661 626,528

Business Outlook
HomeAway management currently expects to achieve the following results for its fourth quarter ended December 31, 2011 and the year ended December 31, 2011, as follows:

Fourth Quarter 2011

  • Total revenue is expected to be in the range of $57.2 to $57.7 million.
  • Adjusted EBITDA is expected to be in the range of $15.2 to $15.7 million.

Full Year 2011

  • Total revenue is expected to be in the range of $229.0 to $229.5 million.
  • Adjusted EBITDA is expected to be in the range of $65.2 to $65.7 million.

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. 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 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) 941-2068, passcode 4476717. Callers outside the United States and Canada should join by dialing (480) 629-9712, passcode 4476717. 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. 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 October 27, 2011 until 11:59 p.m. Eastern Time / 10:59 p.m. Central Time on November 10, 2011 by dialing (877) 870-5176, passcode 4476717, in the United States and Canada or (858) 384-5517 outside the United States and Canada, passcode 4476717.

About HomeAway

Located in Austin, Texas, HomeAway, Inc. operates the world’s largest online marketplace for the vacation rental industry. The HomeAway marketplace brings together millions of travelers seeking vacation rentals online with hundreds of thousands of owners and managers of vacation rental properties located in over 145 countries around the world. HomeAway’s websites include 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 in Spain; AlugueTemporada.com.br in Brazil and HomeAway.com.au in Australia. In addition, HomeAway operates BedandBreakfast.com, a comprehensive global site for finding bed-and-breakfast properties, providing travelers with another source for unique lodging alternatives to chain hotels.

Cautionary Statement Regarding Forward-looking Statements

This press release contains “forward-looking” statements, which are 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, business outlook, potential business strategies, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.

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,” 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 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) changes in HomeAway’s pricing policies or those of its competitors, (f) HomeAway’s inability to effectively integrate acquired businesses successfully, (g) the impact of general economic conditions, and (h) 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 Prospectus previously filed with the SEC pursuant to Rule 424(b)(4) on June 28, 2011 and HomeAway’s most recent 10-Q, filed on August 15, 2011. 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 and free cash flow. Adjusted EBITDA, and free cash flow 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) plus depreciation; amortization of intangible assets; interest expense, net; income tax expense (benefit); stock-based compensation expense, 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 income, 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 management believes that the use of Adjusted EBITDA and free cash flow are useful to investors in evaluating its operating performance for the following reasons:

  • HomeAway management uses Adjusted EBITDA and free cash flow 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 and free cash flow 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 and free cash flow 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 and free cash flow; and
  • Adjusted EBITDA 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 and free cash flow 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 or free cash flow may not be comparable to similarly titled measures of other companies and because other companies may not calculate such measures in the same manner as HomeAway does. Adjusted EBITDA and free cash flow 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 and free cash flow do not reflect any cash requirements for these replacements. In addition, neither 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.

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 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. HomeAway does not include all brands in its calculation of renewal rate. Brands included in the calculation of renewal rate for the period ended September 30, 2011 were HomeAway.com, VRBO.com, VacationRentals.com, Fe-Wo-Direckt.de, Holiday-Rentals.co.uk, OwnersDirect.co.uk, Abritel.fr, Homelidays.com and AlugueTemporada.com.br.