Online travel services provider Expedia Group (EXPE) reported lower profits in the second-quarter of 2018, primarily hurt by increased marketing spending. Early this year, the company had announced a plan to increase its marketing spending to modernize operations and survive the intense competition in the industry.
In Q2, the travel company reported earnings of $0.01 a share, compared to $0.36 a share during Q2 2017. Excluding items, Expedia earned $1.38 a share, surpassing consensus estimate of $0.88 a share. Meanwhile, revenue surged 11% to $2.88 billion, aided by growth in Brand Expedia, HomeAway, Hotels.com and Expedia Partner Solutions. Analysts were expecting the company to report revenue of $2.89 billion.
Lodging, which includes hotel and HomeAway revenue, accounted for a huge chunk of the company’s total revenue. During the quarter, lodging accounted for 69% of the total revenue.
Room nights stayed, for HomeAway, Hotels.com, Expedia Partner Solutions and Brand Expedia, rose 12%, while revenue per room night increased 2% in Q2. Air revenue increased 10% on a 6% hike in air tickets sold as well as a 4% increase in revenue per ticket.
The company’s selling and marketing expenses increased 7%, compared to Q2 2017. This was mainly due to a $57 million increase in direct costs, including online and offline marketing expenses. Hotels.com, Expedia Partner Solutions and HomeAway accounted for the majority of the direct cost increase.
On July 23, 2018, the company’s board declared a cash dividend of $0.32 per share of outstanding common stock with a payment date of September 13, 2018.
Related: Marketing spend hurt Expedia Group results
In the past 12 months, shares of the travel company have lost 18.8%. Today, during the after market hours, the company’s share rose 10.89%.