By Imani Moise
Shares in Expedia Inc. plunged more than 18% in extended trading Thursday after the travel company reported earnings were hurt by increased spending.
Rising costs in the fourth quarter outpaced sales growth, and the company forecast even more spending ahead as it focuses on cloud infrastructure and marketing investments. The travel booking company operates Expedia.com, Hotels.com and Orbitz.com among other websites.
On a call with analysts, finance chief Alan Pickerill said technology spending is expected to accelerate significantly faster than sales growth in 2018.
Cloud spending, which climbed to $18 million from $2 million in the fourth quarter, is expected to total $170 million for 2018.
The stock also plunged in October after the company warned investors following its third-quarter earnings report that it would ramp up spending to try to increase sales and fend off competitors like Priceline Group Inc. Expedia said it is transitioning its technology infrastructure to the cloud to expand its computing power.
For Expedia sales grew 11% to $2.32 billion in the fourth quarter, but total expenses jumped 16%. Direct costs for selling and marketing were $121 million higher than the comparable year-ago period, the company said.
Overall for the fourth quarter Expedia missed analysts' views. The company reported a profit of $55.2 million, or 35 cents a share, down from $79.5 million, or 51 cents a year earlier. The most recent quarter was helped by a one-time $14 million benefit related to the recent tax overhaul. On an adjusted basis per-share earnings fell to 84 cents from $1.17.
Analysts polled by Thomson Reuters had forecast earnings of $1.15 a share on $2.36 billion in sales.
Write to Imani Moise at [email protected]