US online travel company Expedia Inc (NASDAQ:EXPE) reported quarterly earnings that missed analysts’ estimates on the back of higher selling and marketing costs as it grapples with tough competition.
Shares dropped 16% to US$103.70 each in US pre-market trading.
READ: Expedia shares plunge after-hours as third quarter earnings, revenues miss expectations
The company, which owns Expedia.com and Hotels.com, reported a 16% increase in fourth quarter revenue to US$183mln. Analysts were expecting revenues of US$225.4mln.
Net income attributable to Expedia fell to US$55.2mln, or 35 US cents per share, from US$79.5mln, or 51 US cents per share, a year earlier.
On an adjusted basis, the company reported earnings per share of 84 US cents, down from US$1.17 in 2016 and below market forecasts of US$1.15.
Earnings hit by Trivago loss and marketing costs
The disappointing results were partly due to an underperformance in majority-owned hotel search website, Trivago, which posted a bigger-than-expected loss on Wednesday.
Expedia said marketing and selling costs rose 16% to US$1.12bn in the fourth quarter.
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"We are now operating with a clear focus on our highest priority markets, making concentrated investments across the platform including a step function change in our pace of adding new properties to our marketplace,” said chief executive Mark Okerstrom.
“These efforts combined with the impact of our ongoing cloud migration result in expectations for full year 2018 adjusted EBITDA growth of 6% to 11%."
It was the first full quarter of results under Okerstrom. Okerstrom took over as chief executive from Dara Khosrowshahi, who unexpectedly quit to become the boss of Uber Technologies.