Good day, and welcome to Expedia's Q3 2016 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Alan Pickerill, Vice President of Investor Relations at Expedia. Please go ahead, sir.

Thanks a lot. Good afternoon, everybody. Welcome to Expedia, Inc.'s financial results conference call for the third quarter ended September 30, 2016. I'm pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President; and Mark Okerstrom, our CFO and EVP of Operations. The following discussion, including responses to your questions, reflects management's views as of today, October 27, 2016, only. We do not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward-looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to today's press release and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements. You'll find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in our earnings release, which is posted on the company's IR website at ir.expediainc.com. I encourage you to periodically visit our Investor Relations site for important content, including today's earnings release. Finally, unless otherwise stated all references to cost of revenue, selling and marketing expense, general administrative expense, technology and content expense, also exclude stock-based compensation and depreciation expense, and all comparisons on this call will be against our results for the comparable period of 2015. With that, let me turn the call over to Dara.

Thanks, Alan. Financial results for the quarter were solid with gross bookings up 21%, revenue up 33%, and adjusted EBITDA 42% year on year. Now that the Orbitz migration is largely complete, the focus of our core OTA segment has been squarely back-to-business as usual. As we mentioned on our last call, we weren't satisfied with our hotel volumes in Q2 and the teams have now been laser-focused on driving core execution, product and conversion improvements, online and offline marketing and expansion of our supply footprint, all to drive stronger transactional growth. While you don't see the results yet in our Q3 stays, booked to room night trends consistently improved throughout the quarter, especially with our global brands Brand Expedia, Hotels.com, and EAN [Expedia Affiliate Network], our private label business. Our regionally-focused brands, however, are managing marketing spend more with an eye towards near-term profitability versus top-line growth. While it's very early in Q4, October volumes continue to be healthy and it feels good to be back to our operational formula. Egencia is on track to deliver solid year of growth in profitability as it continues to gain share under the managed corporate travel market, innovate and complete key technology projects to set the stage for its next phase of growth. Egencia has set an internal target to double its gross bookings by 2020 through organic as well as inorganic growth, and is positioning itself as the most business traveler and project-centric company in corporate travel. We remain very optimistic about the prospects for substantial share gains for Egencia for many years to come. Team trivago continues to gain share. Q3 revenue growth came in at a very strong 57% year over year, accelerating from an already strong Q2. While year-on-year profitability improved. trivago has seen healthy growth in all…

Thanks, Dara. The adjusted EBITDA of $667 million that we delivered in Q3 was a good result and broadly in line with our expectations for the quarter. Better than expected results across most of our brands more than offset some bottom-line weakness in Brand Expedia and Hotwire. HomeAway and Orbitz continue to perform well and together delivered a solid $150 million of adjusted EBITDA in the quarter. Hotel revenue grew 15% in Q3, slightly faster than in the second quarter on room night growth of 17%. Orbitz contributed approximately 6 percentage points of room night growth for the quarter. We are pleased to exit Q3 with stayed room night growth of 20% in September, 14% excluding Orbitz. We are also pleased to see consistent acceleration in our booked room night trends each month through the quarter, with strength continuing through October to-date. Note, however, that as we improve execution, results are first being realized in the form of accelerating growth in the high-cost performance marketing channels such as metasearch and search engine marketing. We expect to invest some additional selling and marketing behind these positive trends, which could put incremental pressure on margins in the fourth quarter, a trade-up we're happy to make as we continue to rebuild momentum exiting the year. Average daily rates were up about 1% in Q3, while revenue per room night decreased by less than 2%. The gap between the two continued to narrow down to about 280 basis points compared with 440 basis points in the second quarter. Pressure on room night economics have continued to abate as we lap over previous reductions in our hotel commission rates. We saw solid unit growth in our other product lines with air tickets up 32% and rental car days up 34%. Note that Orbitz added 22…

Thank you. We'll take our first question from Justin Post with Merrill Lynch.

Thank you. Dara, just you've now had a chance to digest the slowdown and the issues at Expedia, anything new that you'd like to add on this quarter? It seems like it was more than just Easter and Orbitz. And maybe you could expand on what's going on and what's bringing you out. And was there a competitive shift? And then secondly, just on HomeAway, I just would like to know the consumer reaction to the addition of consumer fees, any new data on that? And how do you think about the consumer fees offsetting some of the subscription revenues as we work into next year? Thank you.

Sure. As far as the volume trends and the execution of the base business, listen, it's just good to get back to execution on the core. There were a ton of people across the company focused in on the Orbitz integration. They did a terrific job. And note that that acquisition integration came after Travelocity after Wotif. So I think the teams are – there's a bit of relief for the teams to get back to basics and get back to the business. And I think it's showing up in the numbers. You obviously don't see it in the stays because there's a book-to-stay lag, but the business has been getting consistently stronger, as we expected it to, as Q3 progressed, and early Q4 looks really good. So I think, listen, we expected it. Sometimes when you hit a speed bump, you wonder whether it's structural or whether it's temporal. I think this one is certainly proving out to be temporal. We don't take anything for granted. We are, as usual, when we accelerate into certain markets, the variable channels tend to be very fast twitch channels for us. So you may see some sales and marketing pressure on that front. And then following the variable channels, you get some of the more direct channels. And so in general, I'd say the teams are not taking anything for granted. I think that Q2 taught us a little bit of a lesson in humility that I think everyone can use once in a while. But based on what we're seeing, the formula that we've established for the past five years still works, and there's no reason why it wouldn't work on a go-forward basis, and we're certainly seeing that in the results. As far as HomeAway goes, the transactional revenue has…

Thanks for taking my question.

You're welcome, next question.

We'll take our next question from Tom White with Macquarie. Tom White - Macquarie Capital (USA), Inc.: Great, thanks for taking my question. Just a clarifier on the room night trends, it sounds like things are accelerating here, but mostly in paid channels. I guess I am not sure I totally understand why the direct traffic or the direct channel is sort of lagging the faster twitch paid channels. And then just on the HomeAway performance, strong quarter on EBITDA, it was sort of in-line-ish in terms of revenue for us. So can you just remind us on that subscription revenue piece how the renewals phase sort of through the year or what percentage occur each quarter? Thanks.

Sure, Tom. So on the room night trends, basically what happens is when you start getting conversion back working, if you can imagine, everyone on your website right now has a higher probability of converting, and in the direct channel that actually provides higher conversion rates and you get one benefit of that, and you also get it from those visitors that you brought via Google or metasearch. But then with that higher conversion rate, you actually adjust your bidding algorithms to say I now expect a higher expected value from the traffic I'm getting from the variable channels on a go-forward basis. And at that point, you're basically in a spot where you can take up your bids. And it adds an accelerator, if you will, in growth for those channels. So that's basically the impact. And then when you look at the impact of profitability, when you have that type of acceleration, what happens is in the quarter, where you're actually ramping up that spend, you only actually get to recognize a portion of the revenue because not all of the stays happen in that quarter and we recognize revenue for our hotel business generally on the stay. With respect to HomeAway performance, listen, generally the subscription renewals are spread throughout the year. As a reminder, we basically eliminated the tiers last quarter, the beginning of last quarter; grandfathered in a number of the premium players. And those subscriptions that were at premium will essentially start rolling off here on a go-forward basis. And once they roll off, they will either reset at the close to $500 per year subscription or the lower price we've set for online bookable properties. And so you'll essentially see the subscription revenue start to become a more negative headwind as we move through Q4, and then Q1 and Q2, and then you'll really start to annualize it in Q3 of next year. And then as a reminder, in terms of the traveler fee rollout as you're thinking about next year, we launched the traveler fee just towards the very end of the first quarter last year in the U.S. and then Europe was towards the end of the second quarter. Tom White - Macquarie Capital (USA), Inc.: Great, very helpful. Thank you.

You're welcome, next question, please.

Our next question comes from Naved Khan with Cantor Fitzgerald.

Hi, thanks very much, so just a couple of questions. Dara, on the test-and-learn velocity, your commentary indicates that you continued to make progress throughout last quarter and it seems like the trend continued into October. Are you at a point where you think you are back in the saddle and even with the competition or do you think you have more ground to cover there?

Naved, I guess I'd compare us to where we were. I think that we have certainly improved, and I think the teams feel good about their execution, but we believe we that we can certainly get better. Can't really comment as to competition and what they're doing. I think that the teams feel better, but they think that they can do better.

Okay. And then just on your plans for integrating HomeAway inventory into the core Expedia. Can you talk a little bit about if you have made any progress on that front?

The engineering teams are hard at work doing it. As a reminder, we have tested with HomeAway previously. There's a vacation rental tab on Expedia, for example, now, but that wasn't a full integration. That was essentially a link off into HomeAway search results. And what we are talking about is a much more fundamental integrated experience where someone who comes to an Expedia or Hotels.com and is searching for hotels, depending on length of stay, depending on weekday, weekend, et cetera, they are going to get a complementary mix of hotel search results and/or vacation rental results based on a number of different presentations and logic. We expect to be piloting that experience sometime in Q4, and based on the results of those pilots, I think we will be making it a bigger part of our experience late this year and certainly going to next year. And I think it's a great benefit both for Expedia and Hotels.com consumers because they're going to get more breadth and depth of inventory in market, especially in some of the markets where HomeAway is very strong. And then I think for HomeAway, our partner is there, the homeowners, the property managers, they are going to get a significant boost of demand from these terrific travel brands, especially in urban destinations. So we think it's a win for the consumer, and it's a win for our marketplace, and we're pretty excited about the potential here.

Thank you.

You're welcome, next question?

Next question is from Jed Kelly with Oppenheimer. Jed Kelly - Oppenheimer & Co., Inc. (Broker): Great, thanks for taking my question. How would you assess your international lodging supply sales force and where would you like it to be over the next 12 months to 18 months?

Yes, listen, we've been aggressively growing our international hotel supply sales force. We grow that sales force as we build out our hotel inventory, and as those hotels start selling into a marketplace. So we're pretty disciplined about the build-out of the inventory and then the increase of our sales force. We've been consistently increasing our international sales force and coverage. There's a significant amount of increased activity now in secondary and tertiary markets that are typically markets where locals travel to, not necessarily international travelers. And our growth rates in those markets are typically in excess of our growth rates in primary markets or international destinations. And I think we're going to continue along those paths. Asia-Pacific markets are where we see the most significant growth, but we continue to make investments all over. Jed Kelly - Oppenheimer & Co., Inc. (Broker): Thank you.

You're welcome, next question?

Comes from Mike Olson with Piper Jaffray. Mike J. Olson - Piper Jaffray & Co.: Hey, good afternoon. Two questions, do you think there could be any competitive dynamics impacting room night growth? I realize you just said it largely had to do with temporary issues so the answer is probably no. But maybe you could just share your latest thoughts then on brand.com, metasearch and other OTA competition. And then the second question is just are there any geographies where you are seeing particular weakness or strength right now? Thanks.

Sure. Listen, as far as other OTA or metasearch competition, I think every single call probably in the past 10 years, we've referred to competition being tough. It's nothing new in this marketplace. And I think it's led to some of the consolidation that you've seen in the market more recently. There have been some players in Europe who are going out of business. So the competition is there. It is always difficult. The competitors are always getting better. And it's not good enough for a company to get better. You have to get better faster, and I think we're on a good path now. And we expect our competitors to be as tough as they've always been. We've obviously seen some activity on the supplier brand.com front as far as some of the loyalty fares that have expanded now versus what we've seen in the past. We've measured pretty carefully our performance in, call it, brand-heavy markets versus brand-light markets. We continue not to see any measurable difference between the two. So it doesn't seem to be affecting our results. What it is doing is that it is shifting more share of our supply to the independents who're growing faster than some of these brands and also to – there are some brands who are giving us the best inventory. So in general, the players who are giving us the best inventory are growing faster in our marketplace, both in terms of direct bookings and then you would think as far as the traffic that they're acquiring. So, and that shift actually is giving us some decent margin, call it, relief versus what we've seen in the past. So you'll notice that revenue per room night trends are generally improving as the year has gone by and some of…

You're welcome, next question?

We'll go next to Brian Fitzgerald with Jefferies.

Thanks, guys. We imagine TV was probably particularly crowded this quarter with Olympics and with presidential races. Wanted to know what the puts and takes were and the efficacy or effectiveness of that marketing channel for you. And then a quick follow on, we wanted to ask about social and dynamic product ads for travel on Facebook. Can you give some color as to the efficacy you are seeing there?

So, Brian, just on TV, we didn't see anything particularly remarkable. There's always something going on. I think certainly the Olympics were a factor, but not a factor for that long. So I'd say nothing particularly we'd call out as being particularly impactful for our business. Dara, do you want to take the social one?

Yes, as far as social on the dynamic travel ads, listen, it's a very, very promising area for us. Our Facebook advertising continues to grow very significantly, and they're a terrific partner. So we're quite optimistic there. Our goal in Facebook is to really get that channel and other social channels to real scale, and what really gets us scale is when you're able to identify intent in a more accurate way. We haven't quite cracked the code there, but we're working very hard with our partners at Facebook and other social networks in order to get there. Retargeting is pretty interesting, and obviously we're investing there. Some debate as to how incremental that advertising is, but we continue to gather data, we continue to increase spend, and the goal is to really scale it to Google-like levels if we can. Next question?

We'll take our next question from Perry Gold with MoffettNathanson.

Great, thanks so much for taking the question. Can you give us a little more color on what drove the revenue commission and margin upside at Orbitz? Was this mostly seasonal? And then also can you provide a little bit more color on the revenue acceleration at trivago? Which markets in particular have been the most robust? Thanks so much.

So just on Orbitz, are you talking specifically about revenue margin improvement overall? I think – yeah, basically air ticket prices are down. And generally, as I mentioned in the prepared remarks, there was some feature and functionality that we did not build on to the brand Expedia platform that Orbitz had. And that resulted in us shedding a little bit of the air volume that we would have otherwise had, and that's essentially offset by better than previous Orbitz performance in the hotel business and also the media business. And then at trivago, I think listen, trivago has had very nice results year to date and particularly in the quarter in the U.S. and their core European markets. We'd call out South Korea and Japan as particularly promising markets too. These are big markets where trivago is targeting to scale up.

Fantastic, thank you.

You're welcome, next question?

The next question comes from Michael Millman with Millman Research Associates.

Thank you. My questions are on the users of your rewards programs and a breakdown between U.S. and particular countries between business and leisure, if you tend to see the users as having been existing customers of Expedia or not. Are they bringing new customers or are you seeing more hotels or air or other, anything of this sort that gives us a good feel for who and why rewards programs are working or not working.

Sure, we believe they're definitely working for us. We've got over 25 million Hotels.com rewards members, and the base is growing by over 30% a year. I believe Expedia Plus is now close to 20 million, if not over, as far as our members go. And the members, both Hotels.com and Expedia Plus as well as Orbitz Orbucks members tend to come back to us. The repeat rates are significantly higher than non-members. And the direct repeat rates or what we call organic repeat rates are significantly higher as well. So you get higher spend, and you get higher spend over more profitable channels. Now, those behaviors tend to come over the lifetime of that member. So we pay for the member acquisition and we pay for the points up front, which is a pressure on our P&L. You see some of that pressure in our revenue margins, and then we get the goodness as the member and the member base matures. The majority of our members at this point are in the U.S., but growth is very fast outside the U.S., especially in the Asia-Pacific regions. We find that our APAC customers love a great deal, and the Hotels.com rewards program and Expedia rewards program, those are great deals. The other factor that's pretty interesting now is that we are getting more and more inventory through our hotel partners that is now available for members only. So these are discounts that are available only if you sign in, so it's not a retail discount. It doesn't hurt ADR at all. But the hotels who are participating in these kinds of programs tend to gain share in our marketplace without giving up retail rate. So we think it's a win for our members and it's certainly a win for our hotel customers as well. We're in the tens of thousands of the hotels that are making these rates available, so you can imagine it's a very, very broad program, and it's attractive for our member base and it's attractive for our partners. Hopefully, that helps with your questions.

Thank you.

You're welcome, next question?

We'll take our next question from Ron Josey with JMP Securities.

Great, thanks for taking the question. I think you touched on this earlier, Mark or Dara. But given the recent ramp in HomeAway's EBITDA, I think it was around $77 million this quarter. Can you just remind us how that's going to trend or how you think that's going to trend in the 2018 guidance that you have, and really how you balance that margin expansion with reinvesting the profits in the marketing and overall share, which I think you are doing now? But I just want to revisit that and try to understand that a little bit better. Thanks.

Sure, happy to give more color, Ron. So I think in terms of growth rates, we're looking at Q3 as a high-water mark, if you will. We're in this period where subscription revenue has not yet become a meaningful drag, and you have got very easy comps on the transactional revenue. And so you basically are dropping a lot of profit to the bottom line, and we haven't yet completely ramped up to full steam on sales and marketing, and particularly in technology and products. So those are two areas particularly where you will see us start in Q4 and then particularly in through 2017 ramp investments aggressively. 2017 I will just tell you is not a year where we will be as focused on adjusted EBITDA growth as we are in just building the capability, and that's for HomeAway specifically. And we expect that once we build up particularly the product and tech team to where the size we want it to be, we'll be able to leverage that nicely as revenue growth and ultimately marketing contribution growth continues into 2018. And again, we feel very comfortable with our $350 million adjusted EBITDA number for 2018, but the path there will be one of investment in 2017 and realization in 2018 from a bottom line perspective.

And I think I just want to make sure that our investors understand the perspective that there are two big players in this space, and arguably a third coming with Booking.com and their activity. But the big player, Airbnb, has a private market cap of over $30 billion. And so we see this HomeAway opportunity as a very, very large opportunity, and we are going to invest behind it as that kind of an opportunity. This is not an incremental project for us. This is a big project for us. Hotel inventory is available very, very broadly all over the world. There are hundreds of agencies, travel agencies, distributors who have hotel inventory available, including these brands that have real scale. That kind of inventory, the alternative accommodations inventory is just not available as broadly. And for us to be able to build one of the count-them-in-your-hands numbers of scale players that are organizing this inventory, which is very, very attractive to consumers all over the world, it's a very big opportunity. So we're investing right behind it as such.

Thanks, guys.

You're welcome, next question?

The next question comes from Lloyd Walmsley with Deutsche Bank.

Thanks, guys. Following up on HomeAway and looking higher up the funnel, is there an update you can give us on that $15 billion number of annualized bookings that HomeAway drives across online and off-line that they provided at the time of the acquisition and what traveler fee attach rate on that are you guys seeing today? And the second question if I can, when you look at Orbitz on the hotel side as you get deeper into the integration of the core properties from Orbitz on to the Expedia platform, are you guys seeing that traditional uptick in conversion rates that might allow you to step up spending in variable marketing channels around that brand? Or should we expect most of the synergy to come from the cost side there? Any color you could give would be great.

Sure, Lloyd. So on HomeAway, the $15 billion number that we quoted, we still feel comfortable with that number. To be honest, we're not too focused on looking at what the total platform derived bookings are at this point. What we're very focused on is taking the booking number that is actually happening on platform and growing it as fast as we possibly can. To do that, of course we're getting properties online and we're now well over a million properties that are online bookable. Then we're very much focused next on making sure that the online bookable listings are actually driving transactions on the platform as opposed to off the platform. And so far, results have been very good. Conversion rates are up pretty nicely year over year. Progress is pretty good. So, again, I think there is a huge opportunity here. I think the total bogey of $15 billion growing nicely because the overall market is growing nicely is absolutely out there. But the way we're getting there is just really focusing on the online piece and driving that as hard as we can. With respect to the Orbitz integration, we're definitely seeing nice conversion results on the hotel product. I think converting that into stepping up in marketing is something that we're still playing with at this point. We have got two very strong global brands in Brand Expedia and Hotels.com. These are brands that we are investing in to build really for the long-term. We think we have got a phenomenal brand also in Orbitz and in CheapTickets and in ebookers and Wotif and Travelocity. But the brands that are more regional in nature, our approach thus far has been, yes, be players in these variable marketing channels where we can, but let's be a little bit more focused on profit as opposed to top-line trend. So I think we're still evaluating our approach here. It's not set in stone. But generally, we're just being a little bit more bottom-line focused with the Orbitzes of the world versus top-line oriented.

Great, thanks, guys.

You're welcome, next question, please?

Our next question comes from Chris Merwin with Barclays.

All right, thank you. I just had a couple. So I think last quarter you talked a bit about weakness in metasearch channels. And are you still seeing that or have you really seen improving trends there? And then also any update on partnering with Instant Book or do you feel like you are effectively driving leads through their meta product currently? And then just a second question on HomeAway. I know you are working to improve conversion there. And you feel like you are on track such that you can really ramp up spend and variable marketing there? I imagine the competition with vacation rental keywords is fairly competitive, so just curious how that was trending. Thank you.

Sure. As far as the meta channels, we have seen an improvement in the meta channels definitely. You'll see it, for example, in our numbers as far as the intercompany spend with trivago has accelerated on a year-on-year basis Q3 compared to Q2. So you could see that in our numbers. And in general, the meta channels are improving. We still think we can do better. So we're not satisfied there. As far as Instant Book goes, we continue to have constructive dialogue with TripAdvisor. No news to share at this point. I think the Instant Book marketplace in general is more mature now, the brand representation is better than it was when that product was initially introduced. So in general, we are more favorably inclined to that product now than where we were before. But we haven't crossed the finish line at this point. We'll see where we wind up in the next couple of quarters. As far as the HomeAway goes, on the conversion front, you're right, we're improving it, and we're on track. The marketing – the variable marketing channels are going to be an increasing factor, but I wouldn't call them a substantial factor at this point for HomeAway. The teams – we actually brought a very, very talented executive from Hotels.com on to the HomeAway team. He had been running Hotels.com online marketing for a while and did very, very well. And so he has now joined the HomeAway team. So I think the HomeAway team is now building the muscle. Conversion is going in the right direction, but really has to build muscle to build a very, very strong variable marketing channel and I think it's pretty early there. Also note that as we integrate the HomeAway inventory into Expedia and Hotels.com, Expedia and Hotels.com and Orbitz and Travelocity will also be able to bid more effectively for the vacation rental keywords as well. Who will be the winner, will it be more efficient for HomeAway to bid on those keywords or Hotels.com, that remains to be seen, and we will be testing and learning our way there. But I think it will be a bigger factor next year versus any time in the next couple of quarters.

Okay. Thank you.

You're welcome, next question?

Our next question comes from Justin Patterson with Raymond James. Justin T. Patterson - Raymond James & Associates, Inc.: Great, thank you very much. Dara, you sound pretty confident on the re-acceleration for the fourth quarter. We have seen some of the hoteliers themselves just lower RevPAR forecasts for the fourth quarter as well as issue pretty cautious guidance for 2017. So just trying to understand how you are thinking through the macro environment at this point in time and investing in the core brand assets. And then just as a second question, mobile, earlier in the year at your Analyst Day you gave 40% of traffic as coming to you through mobile assets. One of your peers is actually approaching close to 50% of bookings through mobile. So, just trying to understand what type of trends you are seeing through mobile today. Thanks.

Sure. As far as the re-acceleration in Q4, listen, it's early. But we like the trends that we're seeing. There's no guarantee that those trends will continue, so I don't want you to take too much confidence as far as how we're doing. We're just reporting based on how we've done and what we're seeing so far. In general, as we look at the macro environment, I do think that some of the weakness that we saw as it related to our results in Q2 was self-inflicted. We were very open about that. The sites weren't as stable as they needed to be. Some of the experimentation wasn't as strong as it needed to be. So we had to get our own house in order. So I think it's difficult to compare our results and trends to macro trends because we went through a lot of change this year. We are seeing while domestic ADRs have been positive, when I look at daily, weekly ADRs, they are weakening a little bit versus where they were in Q2. So that agrees with some of the trends that we're seeing. Our package inventory is in good shape, and again hoteliers load in inventory into opaque channels such as packages and Hotwire and these member-only deals when they need a little more help and it feels like some of the hoteliers need a little more help, on the Egencia side especially domestically, we're seeing a bit of caution as far as corporate travel spend goes. We don't see it in Europe, but we see it more domestically. So I'd say that on a macro basis, we're seeing some similar signs, which is a hint of weakness. We probably don't feel it as much as some of the other folks just because this online channel is a big growing channel, and we're riding that wave, and hopefully the hotel partners who engage with us on the inventory front aggressively are going to ride that wave with us and hopefully gain some share as we gain share. Mark, do you want to talk mobile?

Sure. So, we feel pretty good about the mobile situation. 40% to 60% of traffic on our big leisure brands generally is coming from mobile. So if you were shooting for 50%, we're probably right in that zone. And then in terms of actual bookings that are happening on mobile devices, we've got certain brands, Wotif, Hotwire at times that are bumping up against mid-40%s to 50% range, Hotels.com is just behind them. And I think just the trend here is that we continue to see much faster growth in mobile than we do in desktop, not surprisingly we are seeing an increased shift of transactions and traffic to smartphone. Tablet is petering out. Mobile web is becoming more significant for us as we get much better at bidding for mobile web traffic in variable channels. So hopefully that will help you with a few of the trends that we're seeing. Justin T. Patterson - Raymond James & Associates, Inc.: Great, thank you, Dara. Thank you, Mark.

You're welcome, next question?

Comes from Kevin Kopelman with Cowen & Company. Kevin Kopelman - Cowen & Co. LLC: Hi. Thanks. I just had a couple of follow-ups on HomeAway to help us with the top-line modeling. I think last quarter you gave us a number of transactional booked revenue growth year over year. Could you share that with us again? And then with an increasing portion of the business being driven by transactional revenue, can you give us a sense of the run rate of online bookings that you are generating at HomeAway? Thanks.

Great modeling questions. So I'll help you with a little bit of it. We're not going to disclose the online gross bookings number at this point. It is something we were thinking about disclosing in the future. We're not going to disclose it at this point. I will tell you that booked transactional revenue for the quarter was up north of 250% year over year. Again, it's pretty easy comps. So that's the number. And on a sales basis as opposed to recognized revenue, subscription revenues started to decline double digits. So I would expect that to continue and accelerate a bit as we move here into 2017.

And then overall, our listing count continues to increase at close to 20%. So the engagement of the supplier communities, so to speak, within the HomeAway marketplace continues to be very healthy. So we're pretty happy to see that.

Yeah. Kevin Kopelman - Cowen & Co. LLC: Great, thanks a lot.

You're welcome, next question?

Comes from Ken Sena with Evercore ISI.

Hey, thanks for taking the question. This is Conor on for Ken. Could you just speak a little bit about the take rate stabilization that we're starting to see in the last couple quarters? I think initially you had stated that heading into 2017, we might continue to see that, but it looks like maybe a little bit ahead of schedule there. Are you at a point where you feel you're at parity with the market rates on these things now, or should we expect that to maybe pick up again at some point in the future? Thanks.

Yes, so generally we feel like we are at parity with the competition in most every market in which we operate. We are in all markets offering a low-cost agency hotel offering, which is really at parity. And the differences I think at this point largely relate to upsell opportunities and our Expedia Traveler Preference program, which allows consumers to choose between merchant and agency and some other upsell value-added products that we are offering to our hotels. I think generally the margin story in terms of its impact on our revenue per room night is largely on track with the expectations we've set, which is that we really expect to be largely done with the big project, if you will, of rebasing margins by the end of this year. There are always tactical ups and downs that are going to happen as we move forward. So we may never be the end. We may never have complete stabilization. But we're really done with the big project by the end of this year, and then you're annualizing what we've done through the end of 2017.

Great, thanks.

You're welcome, next question, please?

It comes from Heath Terry with Goldman Sachs. Heath Terry - Goldman Sachs & Co.: Great, thanks. Back on the topic of HomeAway, Mark, the reference that you made towards, I think the term that you used was you were referring to the high point of growth that we are seeing here because of the confluence of subscription and transactional revenues. I guess, one, I want to make sure that we are thinking about that the right way suggesting that the incredible 60% growth that we saw with HomeAway, we should think of that decelerating from here as those comps get more difficult. But then also to the extent you could give us a sense of what's driving that between subscription growth versus transaction growth. And then just finally what kind of adoption you're seeing from subscribers or property owners in adopting online booking and online billing as well.

Sure, so I absolutely meant to say that top line growth rates will slow down from this point forward. And really the driver here, particularly in Q4, is that the subscription revenue will start to be a drag as essentially the monetization model shifts over to either paper booking or online booking fees and also as we start to roll off some of the premium tiered subscription revenue. And then there will be additional factors that will kick in towards the end of Q1 and then again at the end of Q2 of next year as we lap over the booking fee implementation that we had this year. In terms of owners and managers adopting online bookings and online payments, listen, we're really happy with what we're seeing so far. We've got now nicely north of 1 million properties who are signed up and online bookable. A lot of them are taking advantage of the online payment platform that we've got. We're actually looking at ways that we can possibly leverage some of the payments capabilities that we have here at the mothership of Expedia, Inc., which could potentially add some more different payment options than they're offering right now. So, so far we're happy with the traction. Again, it's still early and there's lots of work to do, but so far so good. Heath Terry - Goldman Sachs & Co.: Great, thanks, Mark.

You're welcome, next question, please?

The next question comes from Dan Wasiolek with Morningstar.

Thank you for taking the question, an intermediate term question I guess perhaps, but just wondering if you could talk a little bit about the opportunity and challenges for Expedia around artificial intelligence and virtual reality. And then if I could ask one other question. I'm wondering. You gave the month of September room nights growth rate with and without Orbitz. I was wondering if you might be able to give that September number for the previous year. Thank you.

Sure. As far as the opportunity and challenges around AI and VR, I think on the AI side, we're testing with some interesting technologies such as on the Facebook messenger side your being able to go back and forth with an AI agent so to speak to book a hotel on Expedia. It's pretty cool. You should try it out. And I think it's a very, very early iteration of what a consumer experience might look like. I personally think that the bigger – the more significant opportunity in AI near to midterm is with highly repeatable, call it simple tasks that consumers engage in. And if you combine machine learning there with identity, so for example, on Facebook Messenger, we have identity established. I think on the customer service side, you can have some pretty clean great experiences. You're being able to messenger Expedia to change my Thursday night hotel booking to Friday or cancel my San Francisco hotel booking, et cetera, without having to call someone, without having to give an itinerary number, without having to really speak to anyone, just be able to message back and forth with essentially a bot to get your customer service requests done or, for example, we're very, very – we'd love to work with our hotel partners. Right now you can message our hotels through some of our systems to be able to message a hotel and ask for late checkout or early check-in, et cetera. Those I think are experiences where AI can service you because you've got high volumes, you've got repeatable tasks that a computer can iterate against and learn from. So I think you'll see some of the sexy stuff on the booking side, and then you'll see some of the unsexy stuff on the customer service side, and we plan to experiment with both of them. On the VR side, we are testing with VR rigs as we speak. I think that the potential that we see with VR is to whet the appetite of someone looking at a destination, what experience they can have, and/or a hotelier. So we want VR to be just good enough to make you want to go there, but not good enough for you to avoid the trip. And I think we have plenty of time here.

Exactly. Dan, on the room night growth question, we're not going to answer the September, but I'll just remind you that in Q3 of 2015, organic room night growth was just about 29%. We reported 36% all in. Inorganic contributors were Brand Expedia Asia, which we had consolidated just at the end of the quarter before or two quarters before in Q1 and then Wotif as well with a very small contribution from Orbitz, which closed halfway through September.

Okay. Thanks, guys.

You're welcome, next question, please?

The next question comes from Eric Sheridan with UBS.

Thanks for taking the question, maybe a bigger picture one. One of the announcements that took us a little bit by surprise in the quarter was the Marriott Expedia with respect to Expedia being the technology platform partnering vacations by Marriott. Wanted to understand a little bit of the genesis of how that came to be. And, Dara, we've talked a lot over the years on these calls about the technology investments Expedia is making, about how that puts you on the front foot after a number of years to be a broader technology platform for the travel industry. Is this a forerunner for things we could see over the next couple years and how might that impact the business model? Thanks, guys.

Great question, Eric. And I'd say definitely. Listen, the platform that we build both on the Expedia side and on the Hotels.com side have the capability to be extensible. And just as we are using the Expedia platform to power the Orbitz side with different experiences, power Wotif with different experiences, we will be able to extend that capability to a Marriott vacations and other providers as well. We think that there are tons and tons of hotels out there and hotel chains out there, airlines out there, who don't necessarily – aren't necessarily able to keep investing and keep experimenting and keep optimizing leading sites that can accept payments in every single payment plan known on earth. We can do that. And we can essentially extend our platform into the travel ecosystem, which is something that we're doing. And then on the supply side, we're even tying in now supply from third parties where not only are we acquiring supply directly, but we are piping in supply from other players, and we will present the best choice for consumers based on what that best choice is, based on availability, based on pricing, et cetera. So it is a two-sided marketplace. We're very, very early in this. And then of course we've got a private label business, our EAN business that is actually one of the stars of the show. It's a business that is growing very, very quickly, especially in the Asia-Pacific markets and we're pretty optimistic about. And then lastly, Orbitz did have a very, very big private label business. It had call it more customization capability than what we had built on the Expedia side where we have taken on that team and they're a very important part of our team now and we're building up call it the more – the increased customization capability on top of the Expedia platform. So, we're investing in this area. You're not done seeing hopefully surprising announcements in the future because I think our capabilities are going to get much, much better here.

Thanks for the color.

You're welcome, next question?

The next question comes from Peter Stabler with Wells Fargo.

Good afternoon. This is Rob on the call for Peter. Two questions, please. First, wondering if you could provide an update on Accelerator and what you're seeing there given the current RevPAR backdrop. And then secondly on Orbitz, just wondering if you can provide a little more color on what functionality you've decided not to build into the Expedia platform going forward and just a little more color on what to expect there in Q4. Thank you.

Sure, Rob. As far as Accelerator, we're making good progress there. So Accelerator, the number of hotels that are engaging in the Accelerator product continues to increase. The bidding activity continues to increase as well. We're seeing less engagement from some of our – the big brands out there. So, smaller hotels tend to engage in Accelerator more aggressively. But we're very, very pleased with the results and every week the numbers get better. It is still a new product, and it's not, I would say, a significant driver of our overall results, but we do see it building and we're quite pleased with the early signs so far. As far as Orbitz goes and one functionality, there was a number of, call it, packages type functionality that we initially dropped off that we're going to be adding as time goes on; ebookers in Europe had certain functionality of what we call Sub Pub where we were price some airfare below pub-ish rates in order to go out and acquire customers. There was some fee technology that both Orbitz and ebookers had built, variable fees especially on the air side that we haven't carried through at this point. These are all technologies that were actually pretty interesting, but whenever you move on something from a technology side, you introduce what we call an MVP, a minimum viable product and then you build on it. So some of this functionality may make its way back, some of it is very, very cool. But we wanted to move Orbitz and e-bookers over as quickly as possible and I think the teams made the right trade off calls, and I think that they have executed quite well

Great, thank you.

You're welcome.

And ladies and gentlemen, that is all the time we have for questions today. I'd like to turn the call back to management for any closing remarks.

Thanks, everybody, for joining us on the call today. Dara, do you have any final thoughts?

Just thanks to the Expedia, Inc. employees for definitely a quarter that was a step in the right direction, and we all know that we're not satisfied so we've got a lot more work ahead of us. And thank you to everyone for joining the call.

Thank you.

Thank you.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.