Popular Texas-based online vacation rental service HomeAway Incorporated has just released a statement saying that Q2 profits for the company fell 85% as HomeAway boosted spending to promote its services around the globe. Net income for the company fell to $2.2 million from the $14.9 million earned in the previous year. Sales, on the other hand, rose 41% to $58.7 million from $41.6 million.
HomeAway owns 31 websites and operates in 145 countries around the world. Property owners and managers pay the site to have their properties listed to prospective renters which travelers may purchase without a charge from the site. Sales and marketing costs increased 49% to $20.6 million from $13.8 million and the company also expanded in the Asia-Pacific region through the acquisition of realholidays.com.au from Australia.
According to HomeAway’s CEO Brian Sharples, “During this quarter, we continued to invest in our network of online vacation rental listing websites through new product launches, ongoing network improvements and strategic acquisitions.”
HomeAway fell $0.16 to $42.77 on the Nasdaq Stock Market, though shares have soared 58% since the company started trading on June 29, giving HomeAway a market value of nearly $3.4 billion. Revenue for this year will increase at least 33% to somewhere between $224 million and $226 million from the $167.9 million that was posted in 2010. The company also expects adjusted earnings from $62 million to $63 million.
Even though HomeAway’s business is growing, the company is facing some stiff competition from Airbnb Incorporated, the website that allows home owners to turn extra bedrooms into vacation rentals. Airbnb stated earlier this week that it raised $112 million in a funding round led by venture capital firm Andreessen Horowitz. That valued the company at $1.3 billion.
Source: Bloomberg – HomeAway Says Profit Falls 85 Percent in First Earnings Report After IPO