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HomeAway Attempts to Regain Market Confidence Through Tie-Ups

Posted on Thursday, Sep 10th 2015

After a disappointing first quarter performance, vacation rental site HomeAway (Nasdaq: AWAY) recently announced second quarter results that surpassed market expectations. Additionally, they have been tying up with several other online services providers in an effort to simplify the vacation planning process for their customers.

HomeAway’s Financials

HomeAway’s second quarter revenues grew 10% over the year to $125.8 million, ahead of the Street’s estimates of $123.9 million. The revenues were hurt by currency growth and ignoring those, they would have reported a 19.2% growth over the year. EPS of $0.12 was also ahead of the Street’s consensus of $0.11 despite a 35% growth in sales and marketing costs.

During the quarter, listing revenues grew 6% to $99.8 million. Other revenues, which include ancillary revenue from owners, managers, and travelers, advertising, software, and other items grew 32% to $26 million.

Among operating metrics, paid listings grew 14% to 1,185,000, of which 733,000 were subscription listings and 452,000 were performance-based listings. Average revenue per subscription listing during the second quarter grew 15% over the year to $496 on an FX neutral basis. Renewal rate fell from 72.8% a year ago and 71.6% a quarter ago to 71.3%. The decline was attributed to the transition of HomeAway Australia listings where customers were being directed to Stayz. Excluding HomeAway Australia listings, the renewal rate would have been 71.8% for the quarter. Visits to their site grew 19.6% to 274.4 million during the quarter.

HomeAway forecast revenues for the current quarter at $128 million-$131 million and for the year at $496 million-$503 million. The market was looking for revenues of $130.5 million for the quarter.

HomeAway’s Expansion Plans

HomeAway continues to expand their market reach and offerings through tie-ups. Recently, they announced several mobile platform integrations with other online services providers as part of an effort to make the vacations more enjoyable for their customers. They tied up with Care.com so that renters will now be able to access Care’s listing of certified care givers during their vacation. They also tied up with Ticket Evolution and GetYourGuide to simplify the process of finding and gaining access to local events and attractions at vacation destinations. Ticket Evolution operates one of the world’s largest ticketing exchanges. The integration will enable HomeAway users to seamlessly find tickets to over 65,000 events worldwide. The GetYourGuide integration will help vacation goers to access a curated and categorized listing of things to do at their destination so that they can make better informed decisions about how to spend their vacation better.

As part of their regional expansion, they are now pushing forth in the Middle Eastern markets. They partnered with Dubai Tourism to promote Dubai’s vacation rentals. Earlier last quarter, they also invested in Turkey-based Flat4Day, Turkey’s largest vacation rental website, strengthening their pre-existing partnership which allows HomeAway to list Flat4Day’s listings on their site.

They are also catering to the urban market with the launch of a new cities page that will feature integrations with services like Uber and Instacart. It will also include HomeAway’s City Guides that feature custom online guidebooks created by other travelers to the locations. The Cities page will initially feature Los Angeles and Rome and then add other big cities.

HomeAway also entered into an agreement with Kayak allowing Kayak to display HomeAway’s vacation rentals. Priceline has always appeared to be interested in HomeAway’s inventory. The integration is expected to be completed by the end of the year post which Kayak’s visitors will be able to view HomeAway’s properties as part of the search results and complete their bookings on the HomeAway site.

Their stock is trading at $28.26 with a market capitalization of $2.71 billion. It touched a year high of $36.19 in October last year.

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