Tripadvisor, Inc. Q2 FY2025 earnings call

• Business portfolio mix shift: Growth marketplaces Viator and TheFork now majority drive revenue, with 60% of revenue over last 12 months, growing at 18% CAGR. • AI application: Integrated AI in products, e.g., Brand Tripadvisor's intelligent search, Viator's search result refinement, TheFork's conversational AI testing. • Viator highlights: Solidified market position in North America, experiences booked grew 15%, adjusted EBITDA more than tripled, user experience improved with direct traffic bookings outpacing other sources. • TheFork highlights: Strong Q2 performance with 28% revenue growth in constant currency, adjusted EBITDA margin more than doubled, B2B subscription revenue growth and partnerships like with Mastercard. • Brand Tripadvisor highlights: Focused on core assets, Q2 revenue $242 million, adjusted EBITDA $66 million, invested in improving app user engagement and launching rewards program.

Group revenue grew 7% or 5% in constant currency to $529 million in Q2. Adjusted EBITDA was $107 million or 20% of revenue. Viator and TheFork, the growth marketplaces, represented nearly 60% of revenue over the last 12 months, growing at an 18% CAGR and contributing more than $75 million of adjusted EBITDA. Viator's experiences booked grew 15% in Q2, with adjusted EBITDA of $32 million or 12% of revenue, a margin improvement of nearly 800 basis points. TheFork's Q2 revenue was $54 million, a 28% or 22% growth in constant currency, with adjusted EBITDA of $9 million or 16% of revenue, a margin improvement of nearly 900 basis points. Brand Tripadvisor's Q2 revenue was $242 million, with adjusted EBITDA of $66 million or 27% of revenue, but deleverage due to higher marketing expense as a percent of revenue.

• Q3: Expected consolidated revenue growth 4%-6% and adjusted EBITDA margin 19%-21%. Viator expects 16%-18% growth in experiences booked, adjusted EBITDA margin 14%-16%. Brand Tripadvisor expects revenue decline 3%-4%, adjusted EBITDA margin 22%-24%. TheFork expects revenue growth 25%-27%, adjusted EBITDA margin improving to high teens. • Full year: Maintaining prior guidance of 5%-7% revenue growth and 16%-18% adjusted EBITDA margin, with investment in experiences not impacting consolidated results.

• Brand Tripadvisor faces free traffic headwinds affecting channel mix. • Market competition could impact growth and margins. • Macro-economic changes may affect travel demand and revenue.

Q: Your comments around some of that free traffic headwinds on Brand Tripadvisor and whether this would change your view that 2026 can be the year of stabilization for Brand Tripadvisor given those headwinds? And then if I can offer a follow-up as well, just any comments on your 2 new shareholders, levels of engagement, anything you've sort of received from them or your openness to engage in discussions with those 2 new shareholders?

A: Michael Noonan: Yes, I think as we sit here today and as we've talked this year about returning Tripadvisor to growth and reflecting the headwinds in the free traffic. I'd say, certainly, as we sit here today, some of the free traffic headwinds has persisted. I don't think we are necessarily -- it's too early to call 2026 because we are excited about continuing the work we're doing, particularly in the experience side as we just reviewed. And that's the work we're underway now. So again, I think we are acknowledging maybe things are a bit different than we sat at the beginning of the year, but look forward to doing the work and thinking about how we improve operational efficiencies as we look to our planning, which we are in the middle of right now. Matthew Goldberg: Yes, Richard, I'll take that second question. Thanks for asking. As you can appreciate, we can't go into too much detail about who we talk to or what they say to us when it comes to specific shareholders. We value constructive engagement with all of our shareholders and appreciate their feedback. We always listen. And of course, we're totally focused on creating shareholder value and achieving our vision and driving these strategies. So that's about all I can say for now other than what was reported.

Q: Could you provide any color on what is your mix between 3P, Viator Origin and Triple Origin for experiences? And my second question is that in your outlook, you mentioned you expect revenue growth to reaccelerate in 4Q for Viator, but it does have tough comps. So what gives the confidence on that reacceleration?

A: Michael Noonan: Yes. It's Mike. I'll take both. I just want to clarify the first question was color on the 3P mix origin mix. Is that correct? Nafeesa Gupta: Yes. Michael Noonan: Yes. Yes. 3P is a diverse channel. It has certainly merchants, which are the OTAs. It has travel agents as well. The growth in 3P channel, as we've said, is being driven by our OTA merchant partners. And listen, this is an important channel for us, as we've said many times. They are scaling fast and they are immediately profitable for us, and they are incremental. And so we do look at incrementality very closely. We see a lot of them are coming outside of our core North American market, which gives us confidence in incrementality. So for us, these are additive to revenue growth. They're also highly accretive to our profitability and are allowing us to continue to invest within experiences, which we have been doing this year. And so an important part of that equation. Matthew Goldberg: And then as you think about that, I would just add a reminder that the significant majority of our revenue is coming from the Viator point of sale first, followed by TripAdvisor and followed by third-party non-TripAdvisor. So just as a reminder. The next question was just about revenue growth in Q4. Michael Noonan: Yes. So revenue growth in Q4, I think when we look at our bookings, which has remained very healthy and the volumes have remained very healthy. We see good bookings that are extending and past Q3 into Q4. understanding it is a tougher comp, but we like where the booking windows are and where those -- the bookings are coming in and the health of our new bookings. So we feel pretty confident about that as we turn to Q4. Matthew Goldberg: And I would just add, of course, I spent a fair amount of time to talk about the opportunity we have between the 2 brands to drive meaningful uplift in revenue working together across marketing, product, supply, data, leveraging AI. And we saw some good early test results in Q2, and we see an opportunity to extend that into the back half and really get some momentum in some of those other areas beyond just the marketing efficiencies that I mentioned. So excited about how that's going to drive our performance as well.