Alan Pickerill Dara Khosrowshahi - Chief Executive Officer, President, Director and Member of Executive Committee Mark D. Okerstrom - Chief Financial Officer and Senior Vice President of Corporate Development

Ross Sandler - Deutsche Bank AG, Research Division Thomas C. White - Macquarie Research Naved Khan - Cantor Fitzgerald & Co., Research Division Eric James Sheridan - UBS Investment Bank, Research Division Bo Nam - JP Morgan Chase & Co, Research Division Kenneth Sena - Evercore Partners Inc., Research Division Brian Patrick Fitzgerald - Jefferies LLC, Research Division Paul Judd Bieber - BofA Merrill Lynch, Research Division Michael Millman - Millman Research Associates Kevin Potterton - RBC Capital Markets, LLC, Research Division Ronald V. Josey - JMP Securities LLC, Research Division Kevin Kopelman - Cowen and Company, LLC, Research Division

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q2 2013 earnings call. [Operator Instructions] This conference is being recorded today, Thursday, July 25, 2013. And I would now like to turn the conference over to Alan Pickerill. Please go ahead.

Thank you, Katia. Good afternoon, and welcome to Expedia, Inc.'s financial results conference call for the second quarter ended June 30, 2013. Pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President; Mark Okerstrom, our CFO. The following discussion, including responses to your questions, reflects management's views as of today, July 25, 2013, 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 on our earnings release, which is posted on the company's IR website at expediainc.com/ir. 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 and administrative expense and technology and content expense exclude stock-based compensation. And all comparisons on this call will be against our results for the comparable period of 2012. And with that, let me turn the call over to Dara.

Thanks, Alan. We expected the second quarter will be a tough one, with a number of factors stacked up against us, and it was. Mark will get into the details, but I wanted to lay out some of the issues that affected our performance this quarter. From a year-on-year perspective, we had difficult revenue comps in Q2 due to Easter falling earlier this year than last. In addition, the challenges at Hotwire we called out last quarter were particularly in acute in Q2. And in fact, Hotwire's performance in the quarter was worse than we expected. Lastly, on the expense side, we had a particularly difficult comp for sales and marketing. In addition, we saw some incremental factors that affected our second quarter results and our trends moving forward. First, we continue to face a challenging competitive environment, especially in the U.S., with 3 major travel players entering the brand marketing space: Booking.com, TripAdvisor going forward and our very own trivago. This translated into weaker growth in Q2 for some of our highly profitable direct channels. The impact was more pronounced for Hotels.com and Hotwire, since Brand Expedia was able to offset the impact with strong performance in variable channels as its conversion rate continued to improve. Second, we saw a broad negative impact of TripAdvisor, one of our largest marketing channels, moving to the metasearch model globally, impacting traffic, revenue and profitability. The transition has been difficult, and the environment is quite dynamic relative to our past history with them. We continue to work with TripAdvisor and are beginning to see signs of improvement in the channel relative to early results, something we would expect to continue over time as we move beyond the initial transition. Although making us incrementally more cautious, we haven't let these pressures affect our desire to make smart investment decisions to drive long-term growth, and we continue to push very hard at both eLong and trivago. eLong continues to aggressively compete and gain share in China, affording us a unique and sizable position in our Asia-Pacific operations. And in its first quarter as an Expedia business, trivago continued its international push and grew its revenue nearly 80% year-over-year. trivago is continuing its global expansion and is currently focusing ramp-up efforts in some very key markets, including the U.S., Canada and Australia, New Zealand. And based on a strong consumer response to these markets, we've increased our marketing investment relative to our initial plans. Combined, eLong and trivago investments drove a $13 million year-on-year reduction in adjusted EBITDA compared to the second quarter last year, the bulk of which represented incremental spending relative to what we described to you on our last earnings call. We remain optimistic about just how big these businesses can be over the next few years and are allocating capital accordingly. Now let me turn it over to Mark to take you through some of the numbers before I give a few closing remarks. Mark D. Okerstrom: Thanks, Dara. Despite the headwinds and incremental pressures that Dara described, our consumer travel brands, Expedia, Hotels.com, EAN and Hotwire, taken together, delivered adjusted EBITDA broadly in line with our expectations, as did Egencia, our corporate travel business. Now as Dara said, the brand marketing and metasearch dynamics are such that our top line growth is a bit lighter than we had expected, and we do see those trends extending into July. But we believe we have sufficient cost levers to size the business for a changing environment should these conditions persist. Despite top line pressure on our consumer travel brands, we did make selling and marketing investments at both trivago and eLong, which were incremental to what we had anticipated at the time of our first quarter conference call. trivago's progress thus far in the U.S. and elsewhere has been impressive, and we decided to pour a bit more fuel on the fire. Similarly, we are happy to put more marketing weight behind eLong's continued share gains in the Chinese market. We continue to see strong results for Brand Expedia, with very robust room night growth, along with some promising early results from our package migration. A/B testing of new functions and features on the hotel, air and package paths continue at a very strong pace, and conversion continues to improve. Helped by one last month of inorganic growth from VIA, Egencia grew gross bookings 27%; revenue, 26%; and room nights, 32% for the quarter. Overall, we're quite pleased with the performance at Egencia, as they continue to take share in the global corporate travel market. In total, hotel revenue grew 12% for the quarter, with 19% room night growth and a decrease in revenue per room night of 6%. Domestic room nights grew 11% and international room nights grew 29%. Room night growth decelerated this quarter compared to Q1 2013 due primarily to Easter timing, TripAdvisor's metasearch transition and an eLong channel disruption, as well as our private label business comping over significant growth on some big partners in the prior year. As Dara mentioned, we also saw some impact, particularly towards the end of the quarter, from increased competitive brand marketing in the U.S. As a reminder, as we move through the year, we're facing increasingly difficult comps as we lap over the room night acceleration of Brand Expedia last year. The decline in revenue per room night was driven by a number of factors, including ongoing mix impact of fast room night growth in China, the impact of competitive discounting and couponing and share shift to bigger hotel chains with lower margins. In addition, the shift to ETP is also having an impact as we transition over to the new model. Notwithstanding the positive conversion benefits we are seeing with ETP, we expect that the migration will have a negative impact on hotel revenue margins as we expand the program. More broadly on ETP, we now have more than 30,000 hotels under contract, with over 70% of those hotels live in production. Consumers continue to love the product, and our supplier partners are learning more about how this program can drive their room night growth. Air revenue grew 8% in the quarter on ticket growth of 7%, and advertising and another revenue grew 37%, driven by hotel metasearch revenue at trivago. Now turning to key expense categories. Cost of revenue grew slower than revenue in the quarter and would have generated even more leverage had it not been for the one last month of inorganic impact from the VIA acquisition. In addition, we do continue to see more credit card fraud than we had seen historically, and this is having a negative impact on cost of revenue. As we expected, selling and marketing expense grew faster than revenue, primarily due to our marketing spend at trivago, difficult comps for certain of our other brands, as well as our continued expansion in key international markets. It's worth noting that a significant majority of trivago's operating expenses consist of selling and marketing. And in the near term, we plan to continue investing for growth at an aggressive pace. In total, trivago added roughly 11 percentage points of growth to this line item for the quarter. Technology and content grew 21% year-over-year, marking the slowest rate of growth in more than 2 years and the second consecutive quarter of deceleration. We expect this trend to continue and the relationship between the growth of tech and content expense and revenue growth should continue to get better in the back half of the year. General and administrative expenses grew just under 14%, with 3 percentage points of this growth driven by 1 month of inorganic impact from the VIA acquisition, as well as the addition of trivago. In terms of capital allocation, year-to-date, we deployed over $700 million towards a combination of acquisitions, buybacks and our dividend. In addition, we are pleased to increase our dividend to $0.15 per share for payment in the third quarter. Turning to our financial expectations for full year 2013. Given the environment we've described today, we now expect full year adjusted EBITDA growth in the mid to high single-digit range, but we'll work very hard to do better than that. Regarding the shape of the year, the back half, in particular, the fourth quarter, is expected to generate significant adjusted EBITDA growth, primarily because our selling and marketing and tech and content expenses are expected to grow at slower rates than the first half and because we expect trivago to deliver healthy adjusted EBITDA in the back half of the year. With that, back to Dara for some closing remarks before we move to Q&A.

Thanks, Mark. Although we're facing some near-term challenges, our core consumer travel business is one that we believe can grow at healthy, sustainable top and bottom line rates over the long term. We're excited about the global growth opportunity, the growth of our mobile business and the conversion upside from our ETP program. With the bulk of our replatforming efforts behind us, we're now transitioning this part of our business from a phase of technology and platform investment to a phase of leveraging those investments and positioning the business so our overhead costs are growing slowly than our revenue. In addition, we have 3 important businesses that we consider to be future growth drivers at Egencia, eLong and trivago, where we're very focused on global growth, size and scale rather than on growing near-term profitability. We believe these businesses represent huge long-term opportunities, and we'll continue to drive them aggressively with an eye on a significant payoff in the future. Finally, Expedia, Inc. is a business with a strong balance sheet and strong annual cash flows, and we strive to be smart allocators of capital, investing in acquisitions opportunistically while returning cash to shareholders through dividends and share repurchases over time. We think the combination of strong base OTA business built to grow and scale globally, 3 very big growth drivers in huge categories in Egencia, eLong and trivago and strong cash generation, along with smart capital allocation, puts us in a great position to grow shareholder value going forward. Now let's turn to questions. Operator, would you please remind listeners how to ask a question?

[Operator Instructions] And our first question comes from the line of Ross Sandler with Deutsche Bank. Ross Sandler - Deutsche Bank AG, Research Division: Two questions. Mark, can you talk about the cadence of EBITDA growth in 3Q and 4Q? I think most investors are struggling to get to the -- get back up to the mid to high single-digit growth rate, given the current trajectory and the comments about July. So what gives you the confidence? And then, Dara, it seems like Booking.com is getting more aggressive in every marketing channel in the U.S., not just TV, but within Kayak, within TripAdvisor, within Google. So what can you do to offset some of these dynamics in the medium term? Mark D. Okerstrom: Thanks, Ross. So with respect to EBITDA growth for the rest of the year, just as a reminder, our expense comps gets significantly easier throughout the year. Cost of sale, the VIA impact basically disappears. Sales and marketing in the first half have very difficult comps as last year, Brand Expedia was ramping up. We'll be comping over that in Q3 and Q4. G&A gets a lot easier. And then also, technology and content starts to slow as well. So the expense comps get just particularly easier. And then, revenue is something that is -- as we said, we think is sustainable over time. And I will remind you, too, that at the time of our last conference call, we spoke about the Hotwire organic forecast takedown being replaced by trivago. And just a reminder that Hotwire is much more of a normal seasonal business and, therefore, has particular impact. They have particular impact in this quarter. trivago, given the phase they're in right now, is just much more back-end loaded. So the organic business was already back-end loaded, and trivago basically accentuates that.

And Ross, as far as Booking.com and they're competitiveness, they've been competitive in those channels for some period of time. It's nothing new. And we talked about the global travel opportunity being $1 trillion opportunity. And even in the U.S., our business represents close to 6% of U.S. room nights. That leaves plenty of growth for many, many players. And I would say that we haven't seen any particular change in Booking.com's competitive activity within the trip channel or SEM. Where we have seen a change is definitely the offline channel. And in the off-line channel with booking coming in, with TripAdvisor coming in and with trivago advertising as well, it's tougher for some of our brands to get the kind of share or voice that we've had in the past, even if we up our spend. So from that standpoint, the direct channel, the brand marketing is definitely becoming more competitive. One of our own brands, trivago, is one of the entrants there, and we're seeing really, really good success in the U.S.. But in the other channels, the real issue for us in TripAdvisor was a switch from pop-up windows to metasearch, and that hurt us in the near term. Although, we're seeing some good constructive trends as we optimize that channel. And in search engine marketing, if anything, for example, for Brand Expedia, the SEM channel has been a significantly positive channel as we have increased conversion. And as a result, were able to market more effectively. So it's really the brand channel where we're seeing the competition and the change in the marketplace.

Our next question comes from the line of Tom White with Macquarie. Thomas C. White - Macquarie Research: I guess, I'm trying to reconcile the acceleration in the marketing spend a bit more with the deceleration in the hotel revenue. You guys talked a little bit about the impact of trivago, but the spend on TripAdvisor was down year-over-year. I guess, can you guys just talk a little bit more about where you are spending or where you're shifting dollars, if they're not going to trip? And maybe comment on the relative ROI differentials you're seeing between some of the key variable marketing platforms, be it sort of traditional search or metasearch? Mark D. Okerstrom: Sure. So generally, the trip spend was a significant takedown this quarter, and it really evolved throughout the quarter. We are positive year-on-year in April and went significantly more negative through May and June. That spend, essentially, was replaced with increases in both trivago, as well as increases at eLong. That essentially filled the gap there, and that spend that, at least in period revenue, is a little bit less efficient. So that's probably the biggest story. I would also say that again, towards the end of May and into June, as we saw more pressure on -- in the brand marketing channel, again with the TripAdvisor, trivago, Priceline, Hotwire, all of the players in the marketplace, that did impact a bit our direct type-in traffic, which is really the most efficient traffic. And so that creates a bit of a mixed shift, if you will, into more expensive channels. Just to give you a little bit of the numbers I said in my script, but trivago itself added 11 points of growth to sales and marketing this quarter.

Our next question comes from the line of Naved Khan with Cantor Fitzgerald. Naved Khan - Cantor Fitzgerald & Co., Research Division: I'm just trying to understand the -- Dara, you already spoke about the U.S. and the factors behind the slowdown. I'm trying to sort of understand the international performance. Can you talk about the different geographies outside the U.S. and how they performed? And what are you seeing there in terms of competitive pressures and if anything has changed there?

Yes, I'd say, from an international basis, we've seen a couple of factors. One is Southern Europe continues to be, on balance, weaker. Spain, for example, for trivago, was in a particularly strong market, although Germany was a very strong market. So there seems to be a difference between Northern Europe and Southern Europe, and those trends have been continuing for some period of time. We did see with hotels.com some slowness in the U.K. and Ireland and especially toward the June time frame. Some people chalked it up to the warm weather there. And we talked to some of our search partners, and they were -- they talked about search volume for travel being pretty weak, especially during the summer season. From a Brand Expedia standpoint, the European regions look pretty good. Expedia last year was weaker in the European regions. We have invested in product. We have invested in increasing some of the brand marketing and also invested pretty aggressively in variable channels and in the European regions. And Europe has gone from being, let's say, a weak point last year for Brand Expedia to gaining positive momentum, and we're hoping to build on that momentum. And then when you look at the APAC region, the Asia Pacific, we're seeing continued competitive environment in China. eLong continues to gain share, but that does come with a significant investment on the marketing side. And we don't see that competitive environment easing up. We see it continuing, and we're going to continue to invest in that marketplace because we really do think that we are building a scale operation and securing possibly a leadership position in that marketplace. Mark D. Okerstrom: And I would also just give you just some color on the international room night growth deceleration story. Last quarter, it was about 43%; this quarter, about 29%. The big drivers there and the biggest driver was the disruption that eLong had with [indiscernible] in China. That started at the beginning of the quarter and ended more or less in the middle of the quarter. The next will probably be Easter, which was a big factor as well. And then TripAdvisor is another big driver for us internationally. So those were probably the 3 biggest drivers. And then we did see some tougher comps for a number of our businesses internationally as well. Naved Khan - Cantor Fitzgerald & Co., Research Division: That sounds cool. And then just on Hotwire. You guys did say that it performed worse than or below your expectations. Is that primarily on the hotel side or is it also -- is it car rentals? What are you seeing there?

Yes, it was a combination of both hotels and cars. That business, it continues to be fairly weak. And we talked about the competitive factors. And in an environment with rising occupancy and rising ADRs, we continue to see inventory pressure, so to speak, on the Hotwire front. And that hasn't eased up. We are working through some initiatives to hopefully regain some momentum in that business. But at this point, it's not operating the way that we want it to.

Our next question comes from the line of Eric Sheridan with UBS. Eric James Sheridan - UBS Investment Bank, Research Division: I guess one of the comments from the call I wanted to talk about a little bit more was you made mention that since the last earnings report, you've sort of have made decisions to put more capital to work in the business as part of the longer-term business plan. I guess understanding what drove those decisions and what assurance you could give investors about whether there'll be additional decisions like that as we move through the year or whether you feel fairly comfortable with the budget as it's now laid out in the new EBITDA guidance for the full year. And then the follow-up question would be about capital, raising the dividend today, but in terms of longer term and just using the balance sheet to possibly return capital to shareholders as you move through this investment cycle. I'd like to understand your thoughts on that as well.

Sure. As far as the investments that we made in some of these growth areas, listen, we want to have flexibility as a company going forward. We think that these are good investments that are going to pay off, and they're significant markets that we think, if we win in, can give outsized return to our shareholders. The assumptions that we've made on the second half of the year are that trivago is going to go into a bit more of a profit mode. trivago's profitability is almost all second half from investment mode in the first half. We're pretty confident that's going to happen. And then we're assuming that eLong continues to invest heavily in the China market, both in variable channels and off-line channels as well and also continues to gain share and to grow their room nights at accelerated rates. We don't see that changing. We think we're in a pretty good spot. And what we will do is we'll make sure, just like this quarter, when we talked about the $13 million of incremental costs, we'll make sure that we break out sort of the emerging investments that we're making so that you can track the core OTA business as against some of these emerging areas. As far as our balance sheet goes and our capital allocation strategy, I'd say nothing's changed. We have brought in a significant number of shares over a long period of time, and we believe in reducing our capital base. And I think on a go-forward basis, you can expect the same, although we're not going to talk about exactly when or how we're going to do it. And we will look to make acquisitions on an opportunistic basis. And we have started our dividends, and we just announced an increase of dividends as well. So we -- this is a company that produces a lot of cash flow, and we believe in a balanced strategy as far as capital allocation goes. And I'd expect the same going forward as what you've seen in the past.

Our next question comes from the line of Douglas Anmuth with JPMorgan. Bo Nam - JP Morgan Chase & Co, Research Division: This is Bo Nam for Doug. Can you discuss a little bit about your trivago marketing strategy and why you've decided to push trivago more aggressively into the markets that you mentioned, U.S., Canada, Australia and New Zealand. Are you targeting more cross-border travel there or domestic travel within these regions? And does trivago help your position in Europe for any of your core brands? And then secondly, just want to see if you're seeing any trends or any differences from the supply or direct channels, like are hotel direct sites any more competitive now than they have been in the past?

Sure, Bo. So with respect to trivago's marketing strategy, trivago has a very strong track record of entering new countries using predominantly television advertising to build strong brands with which they back up with a great product. And over the course of their expansion, and they're now at 39 countries around the world, they have developed a pretty sophisticated formula on how they do that. And it goes along, like I said, you spend up, you build up a strong brand. And generally, over time, these markets become profitable and you can move on and reinvest into greater expansion. We saw, based upon the historic track record of multiple country launches, great traction in the countries we mentioned, U.S., Canada, Australia, New Zealand, including a number of other countries. And we liked what we saw, the team liked what they saw. And we decided to pour a little bit more fuel on the fire. Again, it's all very measured investment based upon metrics, and they've got a strong formula. With respect to competition from supplier direct, we're not seeing any material changes. It's been fairly consistent for us over the course of the last number of years and nothing different to report.

Our next question comes from the line of Ken Sena with Evercore. Kenneth Sena - Evercore Partners Inc., Research Division: Can you just maybe share a little bit more about the level of confidence that you have in terms of maybe restoring the TripAdvisor at metachannel to the efficiency in terms of traffic, revenue, profit, where it was previously? And maybe also, could you breakdown maybe the incremental deterioration that you saw in the Hotwire business in a little more detail?

Sure. As far as TripAdvisor goes, we're seeing good early signs. The move initially off of the pop-up into meta for us created a significant headwind as far as both the revenue and profitability that we saw from that channel. And the great thing about these variable channels is that you can optimize, you can gather data and you can respond pretty quickly to the track that you see in the near term. So over the past month, we've been working with the TripAdvisor team, who've been great, as far as optimizing the channel, working our CPC kind of buckets, et cetera. And the early results that we're seeing are encouraging. They haven't gotten to the same levels that we were with-- in TripAdvisor earlier in the year last year, but the results have been improving on a week-on-week basis. And we don't anticipate any reason for that to change. Mark, do you want to talk about Hotwire? Mark D. Okerstrom: Sure. I'd just say the Hotwire situation, as we mentioned on the last call, Hotwire was responding to what they saw. They ran a big May sale, and that caused incremental spend above and beyond that, which they were able to recover through revenue. And that really drove the situation. So beyond that, that's not much more to comment on.

Our next question comes from the line of Brian Fitzgerald with Jefferies. Brian Patrick Fitzgerald - Jefferies LLC, Research Division: A couple of competitive questions. Are you seeing any impact from Trip extending further down the funnel into the transaction area? And then you talked a little bit about your SEM trends and what you're doing there. Are you seeing any impacts from Google rolling out its Carousel product in the core search?

Sure, Brian. As far as Trip moving further down, I think it's much too early to tell. The difference that we saw with Trip was a pretty substantial decrease in the number of clicks that we got from Trip. And we've been working to optimize our click share, so to speak, within the Trip marketplace. And again, the early results that we're seeing are encouraging relative to the first couple of weeks. So we're working to optimize that, and we're pretty optimistic that we can. As to Trip going more downstream, et cetera, I think it's too early to tell. Trip has always been a very significant traffic generator for us. It's, as you know, one of the leading travel brands, and we don't see that changing. We do think the meta product is a better product for them. We'll keep an eye on it, but we haven't seen anything fundamentally different now. As far as Google goes and the Carousel product goes, we've taken a look at it. Google is a company that experiments constantly. We have not seen any material change in either our paid or our free traffic from Google as a result of the Carousel. But it's early, and it's something that we'll keep an eye on.

Our next question comes from line of Justin Post with Merrill Lynch. Paul Judd Bieber - BofA Merrill Lynch, Research Division: This is Paul Bieber for Justin. Just wanted to clarify a little bit where you said -- your comments about the demand environment in Europe. I was wondering if this softness that you mentioned was isolated to Hotels.com? Or did you see some weakness also at Brand Expedia in Europe?

Are you talking about the comments on Southern Europe or U.K.? Paul Judd Bieber - BofA Merrill Lynch, Research Division: I think you said -- well, I think you said U.K. for Hotels.com.

Yes. So I think in the U.K., the weakness that we saw was more Hotels.com, but we've definitely felt in the last couple of weeks with Brand Expedia some weakness as well. I think that the Hotels.com and Brand Expedia are a little bit different in that Brand Expedia because of the platform changes that we've made, because of the replatforming and especially because of the package business, we just moved up to the new packages platform, was able to mitigate some of that weakness. But I would say that the last month or 2 in the U.K. has broadly been weaker from a market standpoint. Just Brand Expedia was able to offset it a little bit because of the packages platform. Paul Judd Bieber - BofA Merrill Lynch, Research Division: And then can you give us some more context just around the impact of Booking.com on Expedia in the U.S.? I think you mentioned that you're seeing a little bit less direct traffic. Is it possible to put some numbers around that or give us some more color?

As far as the effect on Brand Expedia, Brand Expedia has been actually quite strong in the U.S. over the past couple of quarters. I think the effect that we're seeing with Booking.com is just a share of voice effect. And again, the brand marketing that were out there with both for Brand Expedia, Hotwire and Hotels.com, on average, has a lower share of voice than we've had in the past. Brand Expedia, because of the platform investments, I think, is mitigating some of those effects. We're possibly feeling some of those effects with Hotwire and Hotels.com, although it's tough to tell whether it's specifically booking or if it's the environment or if it's generally a number of competitors in the marketplace.

Our next question comes from the line of Michael Millman with Millman Research Associates. Michael Millman - Millman Research Associates: First question is, one, hotel companies talked about a drastic shortening of the booking window in Europe. And I was wondering, A, are you seeing that? And if you are, who the winners and maybe who's getting hurt by it and what the impact of this may be on occupancy and pricing and to what extent that's helping or hurting your ETP? And also, on the U.S. rental car business, I think the last quarter, you said that year-over-year prices were rising. Is that still going on? Are fleets still short? To what extent are the deep discounters affecting your opaque market? And what are you seeing on the retail reservations, any offset from the retail reservations?

Sure, Michael. As far as the booking windows in Europe, I wouldn't say that we've seen a drastic shortening of booking windows one way or the other. We're seeing a couple of factors. One is that the Brand Expedia package business is growing quite nicely. The beach vacation package business is growing again, and we think that's, to some extent or to a large extent, the result of the replatforming that we have been working on for some period of time. We are also seeing significant strength on the mobile channel. On a global basis, we now have over 50 million mobile downloads across our various brands. And the mobile channel, especially as it relates to handsets, tends to be much more last-minute than the desktop channel or the tablet channel. So I think that the increase in mobile bookings that we're seeing, both in the U.S. and in Europe, would probably indicate kind of a second order shift to shorter booking windows. But other than those 2 factors, we're not seeing very, very big movements one way or the other. And I'd say on the ETP standpoint, we haven't seen ETP being affected one way or the other as far as booking windows go. As far as our -- the trends that we're seeing in the rental car market, we do continue to see prices being fairly strong. Revenue per day looks good. And we think that's a result of the ongoing consolidation in the industry, and that consolidation continues. In general, we did see some of the weakness that we saw, Hotwire offset by a bit more strength on the retail portions of our other businesses. Some strength in EMEA and the Asia-Pacific regions, but that wasn't enough to offset the weakness that we saw in core Hotwire, so to speak.

Our next question comes from the line of Mark Mahaney with RBC Capital Markets. Kevin Potterton - RBC Capital Markets, LLC, Research Division: This is Kevin on for Mark. I'm just wondering as you roll out ETP, is that widespread enough that it's going to be material to conversion rates for the company as a whole? Mark D. Okerstrom: Well, I would say that it's starting to be material to the company with respect to our rev margin. And of course, we are seeing conversion uplifts if you take ETP in isolation alone. But of course, there are a whole host of other factors that go on into conversion rates, and so it's difficult to isolate the impact and expect that you would see broad-stroked acceleration across the business directly as a result of ETP. You've got the TripAdvisor transition going on. You've got some brand pressure. You've got continued overall improvements and conversion across really all of our brands. So we certainly think that ETP is a product that opens up the aperture to us in a huge way in terms of Europe and international, to some extent, domestic. We think it's overall long term going to be a great thing for this business. But I think in terms of expecting acceleration on the back of ETP, as it grows, to be more material, we are optimistic but it's not something that we would urge you to expect.

Just to add 2 points to that. We are absolutely seeing ETP hotels or hotels that we convert to ETP perform better than hotels that have not converted to ETP. We see higher length of stay. We see average higher ATPs [ph]. And we see those hotels gain share in our marketplace, which is broadly as a result of higher conversion. There are higher cancellation rates with ETP agency transactions. But overall, the hotels that convert over to ETP do materially better in our marketplace than hotels that haven't converted. We do think that based on the pace of higher -- the pace of our ETP sign-ups, by the end of the year, we're going to have a pretty significant percentage of our hotel volume over ETP. And I think at that point, going into next year especially, you should see ETP become more of a driver for the overall business that shows up in the metrics.

Our next question comes from the line of Ron Josey with JMP Securities. Ronald V. Josey - JMP Securities LLC, Research Division: So I wanted to follow up, Dara, on what you were just saying with ETP. And specifically, I just want to understand a little bit more why hotels are performing better if you're on the platform or not. And also given, I believe you said there's a negative impact on hotel margins despite positive conversion rates, just wondering how ETPs could have -- be more of a driver next year just, I guess, overall volume. And then last question with ETP, and there's 3 of them, so sorry for the long-winded question. But how is it trending with 30,000 hotels relative to your expectations?

Sure. As far as the hotel -- listen, the hotel performance is a function of conversion. And when we tested out ETP with our consumers and we gave consumers the choice of either buying merchant or having a choice or even buying pure agency, ETP was the choice that won out. And the beautiful thing about our business is that we can experiment. We can run experiments against each other. So clearly, ETP has been -- consumers have voted, and we've built back the product based on the consumer vote, so to speak. And we're seeing the result of that within the marketplace. And as a result, the hotels that have transferred over to ETP are producing more than they did and are producing more than their comp set. So from that standpoint, we're very pleased with the product, and really now what we want to do is roll it out so that it becomes a higher proportion of our overall revenue on a global basis. As far as, has it matched our expectations, et cetera? I'd say broadly, yes. There are always operational pains that you're going through, et cetera, but the team has done a great job working through those operational issues. And we're seeing really good momentum now with some of the big brands as well. The Marriott's of the world are signing up. Those hotels are being converted, and I think everyone is happy with the early results that we're seeing.

Our next question comes from the line of Kevin Kopelman with Cowen and Company. Kevin Kopelman - Cowen and Company, LLC, Research Division: Could you just talk at a high level about how traffic on your site has been in July, just given that TripAdvisor has commented on traffic headwinds in the month?

Sure. We have seen some traffic headwinds in general, but some of those headwinds for us have been really a question of mix. So for example, you have a situation with TripAdvisor where if you are advertising on TripAdvisor and you're one of the top 3 advertisers, consumers would be popping windows every single time they clicked on show prices. As TripAdvisor has moved to a meta model, all of those windows aren't being popped up. And that will translate into lower traffic to our sites, which you probably have seen in some at the comp score metrics. We are also cleaning up some of the lower converting traffic with pop-ups, et cetera. And in general, I'd say we're moving more away from that kind of traffic than we have been in the past as we've looked into consumer behavior and whether that traffic really converts or not and the lifetime value of consumers coming in through those channels. That said, we have seen in the U.S. with some of our brands, particularly Hotels.com, a bit of a slowdown with direct type-in traffic, and we've observed that really in June, July. And it's something that we're watching closely because that kind of traffic is pretty valuable traffic, both in terms of the kind of customers that are loyal to you and in terms of the profitability of those customers. In the meantime, we are investing in variable traffic generators, et cetera, to build up our traffic base and build up a loyal customer base, which we're hoping to keep with our loyalty program. So that program continues, but we have seen some short-term headwinds. Kevin Kopelman - Cowen and Company, LLC, Research Division: And also, just a follow-up on mobile. Can you just give us an update on what kind of -- how the activity has been on mobile devices or maybe what percentage of your transactions are coming from mobile now?

Yes, the activity continues to increase across the board. We are seeing very, very strong app trends across the various brands. We got over 50 million apps downloaded across our brands right now, and it's broad. It's in the U.S., it's in Europe, it's in Asia Pacific. eLong is doing a terrific job as far as driving app downloads, and I think the quality of our mobile product is second to none. Expedia has won a Webby, et cetera, for the quality of those products. And Hotels.com, if you'd look at them in the app ranking, they are consistently on top of the app rankings in many, many countries. So we're very, very happy with our production on mobile and our growth in mobile. It is in the 20% range on many of our brands and in many of our countries, and it continues to increase in share on a global basis. So it's a very positive trend for us, and we certainly see no loss in momentum there.

I'm showing no further questions in the queue at this time. I'd like to turn the call back over to Mr. Pickerill for his closing remarks.

Thank you very much. Thanks everybody for joining us. The replay will be up on the IR site shortly after the call. Dara, do you have any closing remarks?

No, just thank you everyone for joining us. We know it was a tough quarter, and we know that we've got our work cut out for us for the balance of the year. And we're certainly up for the challenge.

Thank you. Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation. You may now disconnect.