TRIP - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to TripAdvisor's Third Quarter 2017 Earnings Conference Call.

As a reminder, today's conference call is being recorded. At this time, I would like to turn the conference call over to TripAdvisor's Vice President of Investor Relations, Mr. Will Lyons. Please go ahead.

Will Lyons

Sonia. Thanks, and third everyone, call. earnings to welcome morning, quarter our conference Good

at distributed QX me our XX-Q, night, CFO. we Kaufer, on comparable are reconciliations prepared and after filed financial of our and located close, Joining measures on this GAAP release, the to Investor Steve our In our remarks we CEO; most financial made non-GAAP today discussed measures filed you call. website the release, earnings Relations we Ernst ir.tripadvisor.com. will find available Teunissen, market and our our Last

You'll certain call, also discussed find as supplemental financial this financial information, metrics. which on performance non-GAAP includes well other as measures

our begin, information pass actual TripAdvisor to circumstances. differ by reflect contain as to company's we release over to this the view expressed statements or I'll like And other disclaims that and earnings such cause update today, these represent you Steve. could call estimates call X, November with that any the implied Before of statements. for Please may obligation with XXXX. to forward-looking our results I'd from future remind and factors statements those that, filings SEC or the materially events that refer to concerning

Stephen Kaufer

everyone, you, for and Good Thank Will. joining morning, you thank our call.

In Restaurants, with deepen momentum in Reallocating particularly platform. channels platform. at to more engagement our the the durable building profitable this to growth night, best discussed strong we is with topline our path our continues, we aimed long-term. initiatives shoppers continued dollars our driving but on and has revenue last traveler products believe we prepared remarks brand on Attractions contributed towards direct over As growth to make long-term in that softer results, progress marketing Non-Hotels, hotel building relationships

helping a on for more both broaden every do, further work we grow have but Ernst? we more travelers the to and the improve long to bookable lot game product segments, investing of building trip. focused long-term. to marketplace, In remain supply, play more the our experience, throughout are We moments to and

Ernst J. Teunissen

Thanks, than marketing near-term are quarter early we our Reigniting for continue Steve, But and and positive maximum product to revenue benefit. mix more this challenging proven signs, and deliver optimizing our and good growth this our morning, initiatives has year. everyone. expected hotel marketing long-term we

growth television business, Our prudent expense balance as expense Across expectations. the we'll our strike was continued of as we enabled maintain to adjusted profitability EBITDA our questions. your in between shareholder operating creation. year-over-year. value appropriate has we well up management, advertising driver aim continue will our for open growth and Non-Hotel QX long-term XXXX investment primary that, an strength segment, as us to The for it With

Operator

Thank you.

Our from of Deutsche Lloyd first question comes Bank. Walmsley

now Your line is open.

Lloyd Walmsley

I can. Two, if the taking for Thanks question.

First, in hotel you the flattish growth is prepared in shopper said guys October. had remarks,

So, around it second it? mid-XX%s shopper the just that desktop the Is way about if wondering, mobile growth one. range, say And double-digits would continued October. falling to think then right into to hover imply

to the structure margin nice On seeing here, more the business? it cost you're give core business because expansion. And on ask historically? Is side, a the intensive, you maybe some can color relative we us Non-Hotel obviously the to advertising

that get it topline driven may it's year-over-year, where a declining more bottomed be by EBITDA of trying the that like, have on Thanks. side? looks OpEx so future cost Some by to growth such for driven structure will sense what out,

Ernst J. Teunissen

of growth in saw growth. Actually, shopper Good morning. we October, mobile and Hi, desktop QX of see did relative out-performance growth. a shopper and overall yes, throughout It Lloyd. is flattish question, we continuation mobile shopper The under-performance deceleration. of

is trend overall underlying a that continues that's So that and trend.

and your question, Non-Hotel. between Hotel cost In structure and sort of of second terms

the growing of the so not cost that in P&L, skill What growing. of content, terms Non-Hotel sales and the instance, actually Rentals, but for business. and items We're overall expansion our year and of this line faster general benefits in seen is more for that see what allowed So, this other the platforms different. driving TripAdvisor terms to admin, tech for is to We're segment structure and with is in has the is comparable in of much most we and scale on our which margin marketing, year. that structure we've quite this efficient particularly compared Attractions, Vacation year marketing us spend be of it's also benefits years, that

Lloyd Walmsley

Okay. Thank you.

Operator

you. Thank

Our Cowen and next Kevin Company. comes of Kopelman question from

open. is line Your now

Kevin Kopelman

good and to you morning. on – that on color perhaps Non-Hotel transaction-based new low for the to color give thanks, more and what QX full-year looking us click-based single-digits hotel guidance lot lines hey, growth? of full-year the give you you a for revenue. like and get gave us Can is or Oh, other of some the really Thanks. good revenue Can

Ernst J. Teunissen

Kevin. hi, Yes,

trends of would similar very less. still The QX we've in we That continuation a Non-Hotel growth expect as sees into see year. trends throughout similar in we holds. the XXXX as year, XXXX. seen lines or in said other we more growth Early The the did

that's much lines in rate. the other big of movement growth from not It's really click-based QX, terms the So and difference. in QX relative transaction

Kevin Kopelman

It follow-up like? that, or – what comp, revenue. fact, like Okay. I on easy that Thanks. one in in Is looks easy very an And hotel think then does other just comp that. look

Ernst J. Teunissen

Yeah.

to seen likely negative half. in So, turnaround We're dissimilar the that seen deceleration, – trend in see be into hotel growth QX the again. will we've too we've QX. revenue, in first And QX other rates to is happy not from the be

Kevin Kopelman

just And picture question. big final Okay. then one Thanks.

– thinking are and figure out growth you as should an for level appropriate you we of As are you what XXXX, is? how what about you how And plan profit it? balancing be

Ernst J. Teunissen

auction XXXX, remarks, that core that highlighted our described. on we with enter prepared the the our clearly have on topline Yes, we as we've think XXXX side, the topline we in about in we'll as headwinds seen

year. headwind So be moving that the a will into new

marketing increase our gradual an a well. as efficient of spend as about next We of budget year, continue reallocation but spend, a of TV to paid but increase spend is TV less think marketing

we're So our we of at overall, the going continue we'll Hotel And grow business to In look we'll progress continued other in years. have prudent that and Non-Hotel, we last over over, the take segment. two then expenses balance on over the aspects marketing and quarters our bottom as a mix. very expect and well both top to and as

Kevin Kopelman

Ernst. Thanks,

Operator

you. Thank

Mathivanan Deepak Our Barclays. next from question comes of

is Your open. line now

Deepak Mathivanan

for Hey, the for question. me. questions Two guys. Thanks taking

continues So monetization to first, improve mobile well.

mobile elaborate particularly spend considering trends there's desktop to maybe I a elaborate then adjustments? on think second XX% the desktop why is been one, bit you little that's decline. sharp budget. versus And little it's monetization, partner you driving this a while Can marketing quarter, a – elaborate can up just bit the

Perhaps You going noted scope XXXX? back forward the in well. about call specific of a certain can pulled as out that less you Thanks channels. from that are channels what think maybe we efficient should you lot. How those

Ernst J. Teunissen

we grow web, ever been year-over-year. with Deepak. from on impressive for on monetization, And impact focus but It's continued able indeed, the is partner of the the hi well, we've gone a mobile in have revenue on mobile mobile growth seen monetization. To monetization mobile big parallel Yes, RPS year-on-year, on wins. and per that had again that still as us product start the shopper to all bid-downs on. were our other mobile push cause – Particularly mobile very we the to teams initiatives did

to seen As across and was you have mobile, know, we're side. and off desktop in very site a happy on we mobile wins new kicked QX, the experience, which nice

it evolved, question? On the the marketing I seen can have budget you we full have the and don't how restate question.

Deepak Mathivanan

it's I of was the XXXX. think should have you I a program channels combination of the you out SEM-related or or both? I wondering re-targeting scope was less sure. back trying what and efficient going out forward Yeah, how about know called to figure channels. certain we pulled in if

Ernst J. Teunissen

Yes, Thanks little downstream identified. our it's We've attribution channel a booking. a for across It's a different specific sophisticated in that channels not channels, become more thank of of bit the we've to number so you. different specifying. the

you spend as multiple a We breakeven, or to you there managed dig portfolio deeper, more whole marketing across of but are channels. if efficient less have, know, performance-based less some

been pulling which is planned We scope further our efficiency for in a impact revenue in year, is marketing. on had what optimization we the that growth. we've paid initially our on so And versus more do back believe there

performance-based We channel. continue further that, we that the into QX, do more do we going and to are in year, the continuing on efficiency for scope doing see next

Deepak Mathivanan

Ernst. Thanks, Great.

Operator

Thank you.

of next comes Khan Naved from SunTrust Robinson Our question Humphrey.

line now is open. Your

Naved Khan

Yeah. questions. much. of very a I couple Thank you had

a had clarify versus on to performance ad a more you wanted mobile? the some back fact of effect pulled that the having Is traffic desktop that then channels. And on I pronounced but Just this, follow-up.

Ernst J. Teunissen

Good Naved. has It on had indeed disproportionate hi, effect Yes, a morning. desktop.

And direct performance-based saw on spend of but we per that function the can per to a to revenue ability on achieve. revenue increase able discussed, shopper we pressure revenue as desktop, on shopper in Our shopper per were mobile. we is marketing we

desktop. So been on more the significant has relative impact

Naved Khan

have for when targets, – when between increasing might the moved higher targets the your the Okay. might with hotel ROI you they to advertisers the comment dynamics and then partners two ROI the fact just at of their they interplay on time, What's the And just able mobile And with you are between same monetization? can on that you. you're bidding, of advertise also or shopper? terms when some be on the for different solving improve monetization in are looking

Ernst J. Teunissen

course us or into to Google be monetization improve being Yeah, able is marketing, re-targeting. allows paid It to either plus. lean more on competitive with a of

despite on allow there And mobile. bid-downs, so, to partner marketing expand our improvements spend us

Naved Khan

Thank you.

Operator

you. Thank

Mark comes Our question from next Citi. of May

open. now is line Your

Mark A. May

Thank you.

advertiser terms Thanks. stability any terms already, there bid-downs, for or shopper source but (XX:XX) – are to marketing there, will your plans there have of the sorry impact thinking addressed these including TV if forward? per way potential keep In and in in are in been those increase about in signs revenue marketing adjusting? any of of the And spend, going then your decrease

Stephen Kaufer

makes years. Mark, we've fair do quarter-to-quarter. on is volatility publicly some you've month-to-month for so model. amount to the seen ever-declining but presumably, direction; regard or morning. this tightened rather, partners' increasing of an Steve. business always sense With Hi, to I other their this efficiencies, commenting a This to things, think run for afford be particular In auction and bid-downs, to good don't they've on efficiency case, their our many which, seem There's comments of marketing some they

current new So, future levels. as into we the take landscape, a upon always done, forecast our quo of the bid and we status have based account we plans

Ernst J. Teunissen

things To question, your defined a on and the broadly few impacts I'd like so – second highlight. shopper revenue marketing, Mark, per to

up. was We was but revenue The RPS mobile. for XX%. per down year-on-year Desktop on the total actually down, traffic XX%. bid negative was XX%. shopper than was less So, down on and separately desktop our Mobile

the is, a XX% traffic. driven shift significant also monetizing between So, to mix the degree, lower mobile the by

meantime, quite we are product So, in significantly. our the improving

is provide One to partners, things value at, improving. quarter, performance the if the that has we that the called bring underlying we out that, in of leads we the of just economic been the year-on-year our that look

desktop So, partner driven we've seen the these decline been per on bid-downs. has largely by revenue that shopper

a strides ROAS, So, significant positive our by budget, made at and expect be while of are how of underlying what to performance-based marketing partner partners but time, we revenue these shopper think marketing per we about we we over And our as And obviously also external projections the well, what does, look bid-downs our extent, we is the to of have some value projections for TV development. as the impacted economic budget going we've budget; also happened, shopper. ROAS as in for improve can our function per the behave, shoppers. terms believe our environment in revenue

Mark A. May

you. Thank

Operator

Thank you.

Mike Piper next comes Our from Olson question Jaffray. of

now line open. Your is

Michael J. Olson

fairly I questions. Hey, good morning. high-level have a

And the already their source ways. Thanks. than your that conversion I a sources traffic? thresholds of trend? say, they may traffic you metasearch hard higher ROI other for major it to the that be been or were as advertising really meta think in converting what but or are traffic, what And to than in think changed thinking deliver channel past? Did that then, asked ROI this parts are worsen, ways of the provides have you in is about higher finding could how the of do partners meta-channel alter different

Stephen Kaufer

of more for TripAdvisor. a kind Mike. of partners ones are And to appreciative not part would our the have the had into Thanks. of Steve. quite is that and lump speak the and Sure, looking ROI. chance I to I in more that the traffic on are all interested currently all This buying higher partners

our think clicks bid we to kind an the And them. able A our flexible clients. I for flexible did of conversion downstream partners, the we they to of our words, side to other send to when before, So, be they are convert we direct qualify We that's are more better to and a we mechanism. become that than better a hotel excellent an ready In have in hotel OTA. funnel downstream OTA them book provide effective. this traveler or measure for the send on work partner quality to hotel before down very they

to part So, we're the on our the in side I OTAs ourselves things in invest better make meta-channel kind the don't all on partner any reluctance a And general. of that can doing to detect or partner. we hotels of

health asking it as be a recognize hotels the important very of of that overall into that when table. so, And OTAs comes we serves the them, important travelers, still channel very and for should but and still again, course to bring the function them channel, it's type a tap to meta it to a of you for demand

Michael J. Olson

you. Thank

Operator

Thank you.

question next James. comes from Patterson Our of Justin Raymond

open. line is Your now

Justin T. Patterson

forward? between prepared innovation? then, In tech that in advertising? slowing ex-TV the not expenses you're worry very Rentals. apply some trade-off that and content remarks, well. Airbnb? and of secondly, segment do that going are How you meta-model on Do stepping strategy capture The effectively your profitability? you up And revenue continues does investment, you much. think Vacation about Thank Hotel the of flat, and to Rental, mentioned perhaps and of that to segment and in under-investing Great. growth Why and the the rate a Vacation execute their shape were Airbnb budget advertising potentially How Thanks. you the OTAs OTAs

Ernst J. Teunissen

the quarter, hand, investing TV flat, Justin. our We're were Ernst. enough expenditure. other Indeed, for additional a But one growth. headwinds on in Hotel the to the This for we balance in between, encountering. that third striking is other adjust hand, Hey, year-on-year on expenses than the the are

that striking content. between and actively balance in don't growth we we're believe and under-investing So, revenue EBITDA. are tech We

the on look last our we for sure in If get key a some comparison that substantial monetization. users, been what we've value keep investments over product, we've made and mobile as just our year, campaign, on to focus and you doing proposition and ready our the mobile, brand that price both improving at make for desktop on on to

our So, future we're we we believe line appropriate an objectives level investment of well. have there, and balancing expense bottom growth as against

Stephen Kaufer

take the This question on I'll Rentals. is Vacation Steve. second

So, we're from represented to sure on aiming well make our lodging TripAdvisor. category is perspective, alternative that really that

properties. more the change that, meta? pretty types mix. as to course, the do a we widest not making on range We'd said So, a property, our ability is well. quality. more Having grow and XXX,XXX to high that, properties. of even I'm of, why that's have about within have why than more we good darn And we're consumers than that open To globally. not continue love the find That's while available site different looking supply, to particular that's of to price sure sure feature everything comparison are for of our a the question

of our the no So, doesn't again, But think making other bigger travelers' have it's aid, it's to say lodging to our on we're fair than will it site. and for have that our I we be, become does that to some It claims travelers. important choice guys. alternative clearly, that desire

Justin T. Patterson

Got Ernst. you, you, it. Thank Thank Steve.

Operator

Thank you.

Kelly Jed comes question from of next Our Oppenheimer.

open. now is line Your

Jed Kelly

trends store talk taking cards credit television of data, you are for benefiting shopper or hotel that of some believe in trends? as from customer Thanks my engagement you such terms the question. to advertising, Great. Can the

Stephen Kaufer

is Sure. customer. we TripAdvisor, see relate how the than Steve. looking to the what TripAdvisor. TV searching from more mean, things are When for people best This ad our on-average see I how of come behavior for being their to many we're kind we they

or on seen book, transaction, sites. the they've come sort the likely more to ad, likely shopping through and clients' they more hotel on experience our the when go actually TripAdvisor they're So, downstream and either of they're consummate TV to

So, reviews, to can a understand only specific do but your money. can TripAdvisor can we about TV, whereby how the Not, to generate card, bookings but remind be save us to not goal, you TripAdvisor credit price-comparison instant you to your perception. more to able was of really change question, the folks place help really to might have the a read and where research, as the present you

So, right cards I branding you target like we our wasn't the exercise. couldn't saved from that the TV more that now or tell of are because whether honestly campaign, really something generating credit

Jed Kelly

Thank you.

Operator

Thank you.

Nat comes Our Merrill of next from question Lynch. of Bank America Schindler

now is line open. Your

Nathaniel Schindler

Yeah, hi.

obviously two does You with business. their from are them in then OTA you, principal with revenue competitor, who it's have affect the How that discussion philosophy a pretty that of your partners click-based and other? discussion clear source the changed large ROI. on the revenue And one has

Stephen Kaufer

Sure. an There's We players auction. up big two there. Steve, run This is Nat.

players, When big definition, don't anything you to down, With to are there. mathematical other one can't several shifts by there share course, the the know. the players telling in bids of compete two you auction. brands be I player any

Nathaniel Schindler

same affect just on their lower do though, Do does just, or their bids they share they Not simply behavior? they follow bid? more lowering get bids? Are at How the share. it

Stephen Kaufer

You'd look changes when – trying player market-by-market. aggregate. have single to of What kind a bids, in it's their say I'm to

do to they in know cannot exactly somewhat it's can response. what So, another difficult for and partner

think I of necessarily client. as change part you corresponding other the a think of But it share on big the So, should shift, of yes. wouldn't

Nathaniel Schindler

ROI the all Is their And the doing are partner you a – doing other clarification, individual on it at within has just specific companies. or a level, brands, that brands brand they it's they in across their specific region? corporate changed are these one philosophy that it mentioned

Stephen Kaufer

Yeah, appreciate aren't about question, talk brands really specific the in but I discussions. to we able our

Nathaniel Schindler

Thank Okay. you.

Operator

you. Thank

Credit from comes question of next Bieber Our Suisse. Paul

Bieber is was the Suisse some open. Paul Credit morning. businesses Rental, Non-Hotel for us you business. relative LLC Thank line Attractions those - context components you just rates? size could help and in and Can Good question. give now there's of you of Your hoping I Securities the us side there. for growth taking (USA) my Vacation Restaurants the Obviously,

Ernst J. Teunissen

clearly, Yes, growth the Restaurants. are Attractions rates, of terms faster in and growers

growth in they're in the terms driving So, of the segment. growth,

sizes, of in I In Attractions two with relative smaller. but But other out, as the we not go three too - you. to LLC terms in a want because components broken of the Credit in it Thank but breaking haven't is that's it the specific I'm magnitude, out, be Bieber breaking don't of percentage. to largest order out Paul (USA) more Suisse Securities going Okay. detail the

Operator

Thank you.

question of Jefferies. from Fitzgerald next comes Our Brian

Your now line open. is

Brian P. Fitzgerald

Non-Hotel with there, you Thanks, are have what guys. from anything adding inventory, from of type We to want then follow-up inventory, respect tailwinds your offering if running? more and will, to there's Non-Hotel where campaigns area what dynamic about of of notable conversion you on type then depth you do to out seeing any uplift breadth a there? if the feel And call Non-Hotel at the Hotel. Are or rate the you're branded how know in there, which you and

Stephen Kaufer

hotels. Brian. folks comparison campaign is on The Thanks, focused is Steve. This around much price around very TV educating

part those awareness, themselves. because the a category on in from all to to tell, the components by in conversion are next additional growing TripAdvisor so Non-Hotel at for impossible Looking brand us strong lift

category. have Attraction, goodness Restaurant a in So, of you happening that just lot

grow as And in both the products you The of couple year-on-year. back overall we a percent terms In bookable And well. particular. is listing continue on to Attractions inventory when growing XX Non-Hotel something. XX-plus years, bookable trends, Attractions look Attractions, the or and up supply up Restaurants of

concept marketplace for the has So worked really us.

to regions that grow. already model add We of have, we the all we and TripAdvisor continue continues it. to to it world, we love supply the as the grow demand classic more marketplace in match the to It's where

for TripAdvisor-sourced our XXX% the category bookings QX. Attraction I in up year-on-year was think

lifecycle numbers business trip growth. seeing So, in of and that you we're that hotel together, whole see nice signs other in the that coming just really

you there. So, we're Ernst, think do add want anything? I to good Thanks.

Brian P. Fitzgerald

Steve. Thanks,

Operator

Thank no showing you. And time. am question I further this at

Mr. Chief closing back my it's to the Executive or conference pleasure Kaufer, hand to Officer, comments remarks. over Stephen for some Now,

Stephen Kaufer

everyone, forward our thank their hard for call. very All Thank updating right. you we to continued much. want joining everyone look for the work, next thanks, Well, employees the I around to quarter. and globe

Operator

Ladies thank conference. you and This program. for in participating today's gentlemen, concludes today's

great a have Everyone day. disconnect. all may You

Tripadvisor (TRIP) 7 Nov 172017 Q3 Earnings call transcript