Tripadvisor, Inc. Q3 FY2025 earnings call

Strategic Priorities

• Extending Leadership in Experiences: Focus on fully deploying differentiated assets across Tripadvisor and Viator to drive growth in the $350 billion global experiences TAM by addressing new geographies and categories, unifying operations, and leveraging coordinated marketing, product, and supply efforts. For example, coordinated testing in marketing has improved efficiency and revenue while maintaining profitability.
• Leveraging AI for an AI-Enabled Future: Tripadvisor's trusted brand, content, and data position it to be at the center of the AI ecosystem in travel. Opportunities include personalized planning recommendations, proactive trip offers during travel, and integration with AI platforms like ChatGPT. An AI-native MVP for the planning phase is expected in Q4.
• Narrowing Brand Tripadvisor's Focus: Optimize Brand Tripadvisor's portfolio for profitability by deprioritizing secular decline areas, shifting resources to marketplace growth, and driving efficiency. This includes reducing headcount and aligning costs with revenue expectations while maintaining key features for travelers and partners.

Segment-Specific Highlights

• Viator: GBV growth, improved adjusted EBITDA margin due to efficient marketing channel mix, strong direct and repeat bookings growth.
• Brand Tripadvisor: Revenue decline due to traffic headwinds, but adjusted EBITDA exceeded expectations despite challenges.
• TheFork: Strong revenue growth, 28% growth, and improving adjusted EBITDA margin driven by B2B subscription growth and conversion uplift from AI-powered booking assistant.

Cost Savings Program

Plans to achieve $85 million of annualized gross cost savings by 2027, including headcount reductions and operating expense efficiencies. Impact on 2026 consolidated adjusted EBITDA margin expected to be an improvement of approximately 100 basis points.

In Q3, Viator segment: GBV grew 15% to approximately $1.3 billion, revenue grew 9% to $294 million. Adjusted EBITDA was $50 million, 17% of revenue, with a margin improvement of 550 basis points. Brand Tripadvisor segment: Q3 revenue was $235 million, a decline of 8%. Adjusted EBITDA was $59 million, 25% of revenue. TheFork segment: Q3 revenue was $63 million, a 28% growth, with adjusted EBITDA of $14 million, 22% of revenue, representing a margin improvement of approximately 10 percentage points.

Q4 Outlook

• Consolidated revenue expected to be approximately flat to last year, consolidated adjusted EBITDA margin 11%-13%.
• Viator: Expected bookings growth 16%-18%, revenue growth in line to slight acceleration, adjusted EBITDA margin ~100 basis points lower due to nonrecurring tax credit but expected to increase by ~200 basis points absent that.
• Brand Tripadvisor: Expected revenue decline in low teens, adjusted EBITDA margin decline ~900 basis points due to traffic headwinds and marketing spend for experiences.
• TheFork: Expected revenue growth mid-teens, reflecting currency benefit, adjusted EBITDA flat year-over-year.

Full-Year and Future

• Full-year consolidated revenue growth expected 3%-4%, adjusted EBITDA margin unchanged at 16%-18%.
• Expect Experiences segment to reaccelerate next year with geo TAM expansion and category expansion. Hotels and Other segment to face continued revenue headwinds. TheFork to continue financially disciplined growth.

Risks

• SEO Landscape Headwinds: Continued pressure from shifting SEO landscape affecting Brand Tripadvisor's legacy offerings.
• Market Competition: Competition in the experiences and travel markets could impact market share and growth.
• Macroeconomic Factors: Uncertainty in macroeconomic conditions could affect travel demand and consumer spending on experiences.

Q: Richard Clarke asked about revenue growth assumptions, shape of growth, and Experiences segment growth potential.

A: Mike Noonan responded that Experiences is expected to reaccelerate next year with geo TAM expansion and category expansion. Hotels and Other will face continued revenue headwinds, and TheFork will continue growing. Cost savings program will improve consolidated margin next year.

Q: Naved Khan asked about reaccelerating growth in Experiences and margin trade-off.

A: Matthew Goldberg stated that the operating model shift allows reaccelerating growth while expanding margins, with Viator leading the category in scale, trust, and profitability.

Q: Robert asked about new user trends at Viator and supply expansion in new markets.

A: Mike Noonan and Matthew Goldberg mentioned disciplined new user acquisition, leveraging Brand Tripadvisor's traffic in Europe for new user growth, and marketplace flywheel driving new and repeat users with optimized supply in new markets.

Q: Dae Lee asked about consumer experience change and Tripadvisor/Viator brand positioning for experiences.

A: Matthew Goldberg said user experience will change to focus on experiences, with coordinated efforts between brands to drive flywheel and seamless engagement. Mike Noonan added that coordinated work has enabled confidence in Tripadvisor's experiences growth.

Q: Jed Kelly asked about go-to-market strategy for Experiences and expansion into Western Europe.

A: Matthew Goldberg said go-to-market strategy will focus on category and market, with both brands existing in markets but focus on cross-marketing experiences. Expansion into Western Europe leverages Tripadvisor's brand awareness and traffic.

Q: Nafeesa Gupta asked about TheFork's revenue growth and next year's outlook.

A: Mike Noonan stated TheFork will see step-down in growth next year due to comps but still expects nice growth and profit improvement, with focus on B2B subscription growth and B2C volume growth.