If you need evidence of the impact a quarterly earnings report
can have on a company's stock price, look no further thanHomeAway
HomeAway is the world's leading online marketplace of vacation
rentals with sites representing about 720,000 paid vacation
rental home listings in 168 countries.
It operates websites under its own name as well as others --
including VacationRentals.com, VRBO.com and BedandBreakfast.com
-- in the U.S., Europe, South America and Australia.
HomeAway's sites link tourists with property owners around the
world. The company tries to make it simple for vacation rental
owners and property managers to advertise their properties and
manage bookings online.
Business has been brisk enough that HomeAway has grown
earnings at least 10% and sales at least 20% during each of its
six quarters as a publicly traded company.
But its stock performance hasn't been nearly as smooth.
HomeAway shares debuted at 27 in July 2011. Shares spent the next
six months trending lower, then mostly hovered in the 20 to 24
range after that.
Things changed Feb. 21, when HomeAway's stock price shot up
13% to a 16-month closing high of 28.28. The surge came after
HomeAway beat fourth-quarter earnings views and earned an upgrade
from William Blair analyst Ralph Schackart.
It was a reversal from the last time HomeAway reported
quarterly results Nov. 1.
A day later its stock price crashed 11% on a disappointing
forecast. Shares fell as low as 19.58 on Dec. 10 before reversing
course and trending higher.
Last week's spike gave watchers hope that HomeAway might be
poised for a steadier go of it on Wall Street.
"HomeAway provides a compelling value proposition for both
travelers and owners and benefits from strong network effects,"
JPMorgan analyst Doug Anmuth said in a Feb. 21 report. "We
believe a premium valuation is warranted based on HomeAway's
leadership position, strong growth and business
HomeAway charges owners yearly fees to list their properties
on its sites. It offers a tiered pricing system that allows
owners more options and better search rankings for additional
The company competes against smaller vacation rental home
outfits as well as larger online travel sites such asExpedia (
) andPriceline.com (
), though the latter two focus more heavily on airline, hotel and
car rental bookings.
HomeAway's tiered pricing model has been a big driver of
recent growth in listings revenue, analysts say.
"The acceleration of listings revenue demonstrates HomeAway's
ability to increase prices through tiered pricing, retain
customers through the tiered pricing transition and retain
revenue through bundling and up-selling customers," William
Blair's Schackart said in his report upgrading HomeAway to
Tiered pricing continues to be introduced on different
products and platforms. HomeAway implemented tiered pricing on
its three largest European properties during the fourth
During the third quarter, HomeAway introduced tiered pricing
on VRBO.com. Customers were also recently given the option of
bundling their VRBO and HomeAway listings.
"The company continues to see early benefits from newer
products, including tiered pricing and bundled listings, and we
continue to expect accelerating revenue growth in 2013 driven by
higher ARPL (average revenue per listing)," Anmuth noted.
HomeAway reported average revenue per listing of $349 during
the fourth quarter, up 8.7% from the prior year and ahead of
Anmuth's estimate for $341.
Total revenue for the quarter was $71.6 million, up 22% from
the prior year and in line with consensus estimates.
Listings revenue increased 23% to $62.4 million. HomeAway also
gets ancillary revenue from owners and travelers as well as
revenue from advertising, software and other items.
The top line got a boost from an improved market in Europe,
"Tiered pricing on European sites is tracking ahead of
previously observed U.S. adoption," Schackart noted. "On past
calls, management tempered expectations on European tiered
pricing adoption because of the weak economy."
Pro forma EPS for the quarter doubled to 14 cents a share,
topping views. HomeAway's operating margin rose 160 basis points
to 10.4%, while its net margin improved 680 basis points to
Management guided first-quarter revenue of $78 million to $79
million, above the consensus estimate of $77.5 million. EBITDA
guidance was set at $19 million to $20 million, roughly in line
This year, the company looks to get more revenue from
e-commerce offerings such as online payments and bookings.
"Our primary focus in 2013 is the continued rollout of our
e-commerce capabilities and in particular, the introduction of
our pay-per-booking pricing model and continued distribution of
value-added services," Chief Executive Brian Sharples said in a
HomeAway should also benefit from a pay-per-booking product
set to launch this summer.
"(The product) should help expand HomeAway's penetration among
property managers and owners who rent for fewer weeks in the
year, with limited cannibalization of existing owners," analyst
Analysts polled by Thomson Reuters expect HomeAway to report
earnings growth of 33% this year and 23% in 2014.