AWAY : NASDAQ : US$36.94
Based in Austin, Texas, HomeAway is the world’s leading online
marketplace for vacation rentals. The company owns and
operates a portfolio of online properties, which includes
HomeAway.com, VRBO.com, Homelidays.com, Abritel.fr, and
FeWo-Direkt.de. The company has 145 countries with vacation
rentals listed on its websites and serves 19 countries with
All amounts in US$ unless otherwise noted.
Technology — Internet
SOLID Q1 RESULTS; PPB ON TRACK; MARKETING SPEND ON HORIZON
HomeAway reported solid Q1 results marked by continued expansion of
the PPB model. How this model rolls out and competes with or is
integrated effectively with the core subscription business at HomeAway
remains the key question for the stock this year, in our opinion. We
believe investors are cautiously optimistic, while also grappling with
how much the company may spend on marketing later this year to fuel
growth in both businesses.
Bullish: strong PPB listings growth, with 35k new listings added in
the quarter; other revenue showed substantial acceleration;
inclusion of European properties on core HomeAway technology
platform should drive expanded European momentum later this
Bearish: Subscription listings grew by only ~5.6% y/y (10.3%
adjusted); sequential subscription ARPL expansion of $7 was the
lower than other recent quarters; guidance implies slight EBITDA
margin pressure with potentially more marketing spend to come
later in the year.
Estimate Changes: We are slightly raising our FY14, and FY15
revenue estimates from $434M and $499M to $440M and $508M,
and lowering non-GAAP EPS estimates from $0.72 and $0.95 to
$0.67 and $0.92.
We slightly lower our price target to $41.00 (from $43.00). Our new
price target is based on 45x (unchanged) our revised 2015 EPS estimate
of $0.92 (down from $0.95). We maintain our HOLD