TripAdvisor, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Mergers and Transformations: Closed merger with Liberty TripAdvisor Holdings and converted to Nevada. Energized about continuing transformation, focusing on diversifying portfolio, optimizing legacy offerings, and shifting mix to growth marketplaces.
• Segment Performances:
  • Viator: Bookings growth, revenue scale, and profitability progression due to disciplined execution in optimizing marketing channels and growing active customer base.
  • Brand TripAdvisor: Made enhancements to hotel shopping journey, mobile app, and integrated AI across surfaces. Focused on scaling product wins across hotels, experiences, and app.
  • TheFork: Continued to diversify revenue mix, with growth in B2B software subscriptions and impact from partnerships.
• AI Integration: Focused on providing contextual and personalized recommendations across all surfaces, leveraging AI for fraud detection, content moderation, and travel assistant functionality.

Segment Performance

• Viator Segment: Booked experiences grew 15%, revenue reached $156 million, a 10% growth (approximately 12% in constant currency). Adjusted EBITDA loss was $18 million, representing an 8 point improvement in margin. Revenue contribution from Viator is part of the overall marketplace businesses.
• Brand TripAdvisor: Revenue was $219 million, a decline of 8%. Adjusted EBITDA was $65 million, representing 30% of revenue. The decline in revenue was driven by various factors including traffic volume dynamics and product transitions, but the point-of-sale remains very profitable with over half of revenue from direct channels.
• TheFork: Revenue grew 12% or 16% in constant currency to $46 million. Adjusted EBITDA loss was $3 million, reflecting normal seasonality and a 100 basis point margin improvement. Growth was driven by a mix of B2C booking volumes, B2B subscription revenue, and partnerships.

Guidance

• Q2 Outlook: Consolidated revenue growth between 5% and 8%, adjusted EBITDA margin approximately 16% to 18%. Viator expects mid-teens growth in experiences booked, 9% to 11% revenue growth, and mid-to-high single digits adjusted EBITDA margin. Brand TripAdvisor expects sequential improvement in revenue (flat to 2% decline y/y) and 26% to 28% adjusted EBITDA margin. TheFork expects revenue growth to accelerate to 26% to 28% (includes currency benefit) and mid-teens adjusted EBITDA margin.
• Full Year: Maintaining full year guidance provided last quarter of 5% to 7% revenue growth and 16% to 18% adjusted EBITDA margin, as macroeconomic environment remains uncertain.

Risks

• Macroeconomic Uncertainty: Travel demand may be impacted by slowing economic growth, with early signs of pressure in average booking value and cancellation rates. U.S. share of international travel from certain source markets is down, though consumer travel intent and business impact not yet material.
• Marketplace Competition: Continued experimentation by competitors like Google in ad placements for experiences, which may require ongoing optimization efforts.

Question and Answer

• Q: Regarding guidance and the Liberty buyout, how is macro uncertainty impacting guidance and what does the completed merger unlock?

A: Mike Noonan stated they are happy with Q1 and Q2 start but recognize macro uncertainty, feeling comfortable with existing guidance framework. Matt Goldberg mentioned the merger cleans up capital structure, simplifies story, and provides flexibility to focus on value drivers, including AI and governance.

• Q: On Viator margins and cross-border exposure, thoughts on marketing leverage and adjustments to marketing spend?

A: Mike Noonan said Viator can have OTA-like margins with product-led growth driving conversion and marketing leverage. Matt Goldberg noted Viator is predominantly North American booker base, less susceptible to some international trade pressures but still monitoring.

• Q: Impact of Google changes on experiences and average booking value?

A: Mike Noonan said Google changes are expected, with continued optimization efforts. Average booking value decline is due to third-party mix growth (OTAs, etc.) booking at lower price categories, but third-party traffic is highly incremental and profitable.

• Q: Viator marketing, third-party distribution trade-off, and AI partnerships learning?

A: Mike Noonan said third-party distribution is highly incremental and profitable, aiding scaling. Matt Goldberg discussed AI partnerships like with Perplexity, OpenAI, and Amazon Alexa, learning on optimizing user experience, trip planning, and brand elevation in AI ecosystems