TRVG - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen and thank you for standing by, and welcome to the trivago Q3 Earnings Call 2020. At this time, all participants are in a listen-only mode. [Operator Instructions] I must advise you the call is being recorded today, Tuesday, 03 of November 2020.

We are pleased to be joined on the call today by Axel Hefer, trivago's CEO and Managing Director; and Matthias Tillmann, trivago's CFO and Managing Director. The following discussion, including responses to your questions, reflects management's views of the today, Tuesday, November 03, 2020, only. any update undertake information. revise not does obligation or to this trivago

materially expect, anticipate could always, made to and by Company's about typically we statements of the information words SEC for other trivago's believe, today's as statements. As actual from and the results the forward-looking, QX on XXXX some these financial Please similar to or statements. forward-looking call cause operating are differ such filings which we refer the we review factors, preceded with

will reconciliation comparable which IR in and You find to Company's of the ir.trivago.com. review, GAAP trivago's non-GAAP most financial is measures the at today posted on measures discussed website operating

to Investor visit trivago's encouraged important Relations are content. periodically for You site

be With the period Axel. Finally, unless otherwise let stated, that, Thank all call will results of you. comparable against comparisons over XXXX. turn call on the me to for this

Axel Hefer

progress achieve adjusting we Good first, And to morning, In and position. proposition preserve call. thank second, to QX, our earnings marketing. you to joining our things, two products, our value on cash recovery wanted for continue our plan

third full cash outlook the released rising term implemented, a challenging. number our at EBITDA creative travel to product quickly core continued of infections of being new our almost We scale performance with features and infection our adjusted short our alternative streams very a tested model CPA appears bidding the on a business we’re partial markets marketplace notably We and of local With we many product. back number Looking concept improved managed the new to results; our and achieve and even call and broke our in revenue in lockdowns and flow marketing positive in and successfully. of we happy basis. a most quarter, new a new accepted the launched our

show effect that as vaccination treatment in closer to a progress in XXXX. travel sustainable and However, are we testing, and likely believe recovery is coming

We point the disciplined on in on Matthias more it with this our in irrespective and in term to development financial of focus outlook. short turn progressing And time plans over I’ll cover to continue to travel a our detail. that

Matthias Tillmann

and Thank morning you, Axel everyone. good

campaign the very continued up pleased learnings with build our brand and the cash a tested limited we the new our focus to Overall, response positive results. the on makes where therefore and messaging us confident We sustainable recovery. preserving can Dusseldorf. in for investment We Spanish on to tailor European and certain were restructuring entity consolidated quality operations and the We to headquarter also our marketing to the with referrals on performance season our in a quarter. was seeing of us general significant lockdown cases activity in advertisement improvement a to driven and to holiday invest of is in the markets demand summer were due in entered second referrals COVID-XX developed In subsequential travel European by and segment Europe, revenue quarter peak per Hemisphere. was mainly our qualified The the the qualified compared as we third strong. measures lower recovery most certain Northern in our traffic. of high buying our test very and close countries marketing sale countries. This we we uptick particular, our in increase in number in We’re in TV easing channels allowed mindful selectively the focus in to finalized

marketing non-discretionary expenses and other In items. other addition, selling we and reduced

to in and the €X.X €X.X a of expenses of same operating quarter compensation period compared million. loss XX including initiatives our XXXX. the to result, of net positive decreased or a cost As higher travel by saving adjusted combination and million The in XX% activity a price million our third stock led EBITDA

company the the progress our and financial happy future. challenging very setting our expect continues foreseeable for market still what will results we Overall, we in the quarter are third made to We in up In emerging referral with there week be in unpredictable but cases trends of of impact beginning volatile development. our a COVID October. few the negative developed on October Europe, increase are had since qualified be second since in the new rapid

year-over-year end September again. again October growth or the drop going most since began it While to rate mid full stabilized lockdowns has as partial are countries of into

and Latin couple have in and are there growth Looking improvement world in in since is XX% both growth significant stable around has U.S. revenue our referrals observe in be growth third the quarter. steady XX% mix in by year-over-year referrals mainly of per to were growth Americas, qualified levels October. at qualified the while XXXX which slightly over of our continue in Qualified to while rate year-over-year the of around levels. the the levels last XXXX increase effect, August. qualified referrals rate the XX% qualified differences overall started rate America segment referrals has the year-over-year year-over-year driven rest to hence been continues per in weeks from regional a stable rate referrals Due improving referrals we of revenue XXXX the October our revenue In decline of to country been

wave the low of have in negative cases a first in expect quarter Europe, in quarter. the EBITDA we As entered and now are COVID-XX faced we our season with particular second

the setup to for now line environment are are continue take will questions. Operator this preserving and on please. the let's we until we focus confident company challenging open ready to With rebounds. we travel question that our first that for However, cash

Operator

Ladies first Davidson. D.A. from you. question-and-answer of from we line Instructions] gentlemen Thank White Tom will your comes now the begin the and session. [Operator question And

now Please question. Thank ask your you. Your line open. is

Tom White

for taking my guys question. Thanks Great.

inclined traction is my more or the then real any the accurate you that to you product presumptions about you back that CPA of as guys normal first want of Just to that I really would new cancellations product a to the normal just of I one net CPA quick the have in expect advertisers maybe talked would I becoming on am current guess get once to version not are environment. and I advertisers cost that be to you be appealing things and version guess net push kind there the in follow-up. product, the like acquisition that the and getting Is the are curious really

Axel Hefer

Of course.

So as be clear product mean product. just taken now have live I gross to the are and CPA out October CPA in that rolling we we a

of booking we over the are booking risk. taking conversion risk So, the the happening,

taking given to over move environment. current deal cancellations CPA will We a for the market in months. first the something very, not we and come CPA the we will not next is we the travel Whether think And particular with to travel advertisers it good down in gross is and entering actually our in scarcity And think is it's there lot. short next very has that good risk. of to year. time are eventually couple advertisers We helping significantly to that data very or uncertainty the our help see windows. very are that a a the weeks net foundation step But and that model very, very-very

Tom White

Thanks. helpful. That's

I kind might your corporate I there as guys quick your Do a you come just think or percentage you So have of guess, business to from unmanaged travels. mean any sense of travel corporate referrals what follow-up. and

travel that reimbursed that's oppose as So companies? maybe corporate travel the the spend large through workers and to his kind rooms management goes booking getting own of hotel

Matthias Tillmann

sure. Yes

travel, of know corporate on business. our the So don't we exact mix

don't perfect we So that. on have visibility

part from third that of development there you're quarter. However, that in kind to coming what we answer mix. quarter question? large etc. is in business of and market is now through we rather what continues A travel the said a the our obviously business we past our website interaction on fourth the city relative of part the travel Does seen not rest general trips in but largest estimate through the is obviously Yes. and behaviors, that have the your certain in negative

Tom White

Yes. very Appreciate you Thank it. much.

Operator

Thank question Brian of from And line the from you. Fargo. next comes Wells Fitzgerald the

now is your ask open. Please line question. Your

Brian Fitzgerald

far follow questions of you how and rollout regional? remind Is ads. a How it trended? XXXX Thanks. could. the want it you broadly? second rollout assess to over vacations. sponsored Actually has just the process the question to it of we? us and around city and if city that Can rollout? is understanding better rates then We're and are varied How to the the How's listings Is Thanks. on there. would with I specifically maybe get your types with trying Two display in Is exposure it travel into of I those around listings the time respect to any display certain up the it Has accelerating? particular implemented? runway on-boarding being ads adoption sponsored Is inventory?

Matthias Tillmann

part first on the Brian. Axel. pass is to Matthias. question take will I and Thanks your then it This of

of a whereas usually to you to what third up city traffic trips example general, destinations So we were shift before destinations in we destinations large a a part an city Germany. of is there nature yes, saw year-over-year whereas decline in is use our trips at Yes. seen least so so big and idea the to clear than in we destinations more give nearby trips in We nature city destination Germany. mix that have saw of even XX% and city quarter that

back that international we that our right look last nature close past categories lastly and believe exactly at those will are travel seeing is in like now. that what travel come what and said seen have That's and first. exactly we then if you we destinations So in is the update we city what

Axel Hefer

having much I very different of the we offering interest been because all their there of interest second can is have The display product to question, and and the serve broad. our in the advertisers by BXB use there better. advertisers listings these sponsored a your status been that first cases regarding serve huge I'd alternative they needs mean by products huge, rollout On broader towards adoption our slightly and like of has and say

that really and more a say remain where in of of the there products these bit and bit very-very is infections obviously very temporary So in market and we a the Europe more lot we some generating products partners. been these is say have permanent of very in. a because none started sooner. obviously confident have in their sustainable a has tests environment interested currently significant and is markets prepared I for have difficult Others but are still time a recovery of the a products remains new wouldn't advertisers with environment certain specific volumes being very currently campaigns the well also just that The segment taken I our next there year despite are we interest difficult for would the setback are to strong

Brian Fitzgerald

Matthias. Thanks Axel. you Thank

Operator

Thank you. The Khan Naved line next question comes Truist the of from Securities. from

question. your Your ask now line is open. Please

Unidentified Analyst

for question. on Zeller, Robert Naved. Thanks is the this for Hi taking

So two March? can been in out guys have called you the guys have travel mentioned resurfacing if you on more lows today see that I local demand the letter feature of product April during this North and versus destinations guys can. traveling plan demand you And local launching parts drive Europe new how in of travelers in and the COVID that America the you to would and nature With discover you think so compare secondly, you then, that the to they I saw XXXX.

guess that return this destinations? more expect or travel Thanks. when to to going I cities continue XXXX? populated you do a bigger do see trend you to densely into So is

Matthias Tillmann

question. is Matthias. Robert. I first Thanks of your take This the part will

March. how does the So to compares situation current

So you first more broadly with books my a data different but of prepared a as mixed we three in developments and here. have bag that our the give is just, have remarks I all October covered in few been let me increase we similar October obviously segments. points very Europe was of In in cases to negative to last then week said of clearly a decline. But see having qualified of it the our that weeks the referrals. October COVID in September we and first the development started new mid only still in

than less that probably declining weeks. that couple are I and exactly it's and compare to that will overall, will situation weeks that early compare and are in How give development we I of is probably given also think be, too early it's clearly referrals a bit in can again to think qualified will you So and to March three impacted. we the update but that be April in Europe on into April better a now a early still

see clearly as On in the in other before trend I hand we Americas particular said in and a notably most in positive Latin Brazil.

during confirms for Europe in week and travel. it Europe. the and trend the overall last be example is well. have that summer last When makes There a the referrals have in seeing we in in Brazil half that domestic international of shift in So comes that almost this might will we qualified travel October of over seen season destinations but and were now as the demand summer seen people want what second well in in year's as at are that demand country travel us is level to confident choose people in pickup there next year recover

Axel Hefer

be your our what to seen that local think our markets We that summer of So core and on be be that local greater we've think next the show year absolutely will for year, than the do important travel we that particular XXXX. travel question so expect so in -- next recovery. all in sustainable very-very product and there right. regarding do will outlook you're discover also for that in We much

to of earlier us. city So that -- The a said year. are for similar this our return seen Matthias very trend important what trips as we've

that product For more in the local. the is half recovery the be focused expect product on nature discover second or some half our but is it The first uncertain. is city focused in core not of year also more there specifically more on there some that we opportunity but might is and

and a So accepted that go giving where in are other full It inspiration you on and months. customer need and distance XXX% could of we destinations the next to working over on deploy think in we the launching platforms in is for do it that more spot of features have next the planning terms app is driving pipeline year. to the product are couple we and of and this is you on

is features when with next the it will that year. ready again So will volume full come, increase

Unidentified Analyst

you Okay. Understood. very much. Thank

Axel Hefer

Thank you.

Operator

next Securities. James The the question from Mizuho you. of line from Thank comes Lee

is now question. Please open. Your line ask your

James Lee

a I questions. hoping to my trends taking was get for geographic bit here. Thanks specific Great. the more maybe little on

for about down talk qualified year-over-year Europe. trend down What about you for guys and Did is referral revenue trend U.S. you You specifically the Thanks. have like what is that looks referrals for October. a sense the revenues referral in XX% commented like? referrals year-over-year XX% the qualified

Matthias Tillmann

So James. thanks

the So I mean, on U.S. gave I some data point,

I U.S. think trends they August. qualified is specific changed. in the said has been remarks here nothing stable since year-over-year there add in above as rate my And I not the referrals all broader to prepared growth have

fewer So a city towards shift still see travel trips. and we domestic

center So are world the If that's and we on Europe. look rest at U.S. of the there regional East differences in

our declining For year-over-year to Southeast qualified example in not developed very the growth that referrals rates COVID hand new is declining effect segment and the as fast. Europe other are Asia we segment development India, Japan in in also with qualified And fast Australia, in our the on greater biggest then but see market regions cases. offsetting particular in the the other a the segment. similar are recovery namely in referrals increase

rate So is I QX. regions. to say stable we the more all what in is Yes. overall specifically the compared to That year-over-year have revenue seen can growth

James Lee

follow-up first And are are talk of we Matthias to you referrals? growth I question have to here about revenues half in of a or XX recovery you referring and normalization referring

Matthias Tillmann

Growth of referrals.

our component revenue when look then our have and obviously basically that talk that the mean you and would at if separately. travel the referrals on So at have underlying to we demand into top qualified normalization translate you we and you that look monetization about is

James Lee

much. Okay. Thanks Great. so

Matthias Tillmann

No you. problem. Thank

Operator

you. Thank

Next Susquehanna. comes from Patil the from Shyam line question of

Please open. your line ask Your is now question.

Unidentified Analyst

Ryan on Shyam. for it's guys, Hey

Just quick two ones.

travel that the of recover kind about next some under Google in sustainably vaccine? what's contingent DOJ is a second secondly, you First then And confidence Is of talk should can year? on demand half scrutiny. that giving you

funneling you they own do So to could decide into if Thanks. think kind that maybe on of you help off travel their ease product? traffic

Axel Hefer

Sure.

the is do that is summer the to travel. on our in first beginning travelers thing in of in what we've southern recovery northern already I think summer the sustainable and need hemisphere that there confidence a now confident year seen of and traveling the hemisphere next makes So that want in is, mean, that us fundamental there I giving what us

same So summer. and trend or for the also that see needs expect we persist trend same to next see the for

peak nature So demand a strong in season. the

control availability the terms important overall a improvements half of which that of recovery that trips. the obviously right a and be we on very lead is and at the a we development city us there a be second now the the and that to of the treatment I For doesn't mean why to to to you least are perception combination destination. of And um positive where year believe will will trips city next impact year the that But, see positive segment areas better very to will give testing a season are us pandemic city of that in some of vaccine is the travel we lot over. and think happening and faster important that agnostic for us of autumn will overall high-risk do cheaper mean

anybody So the feeling as offer and as a product don't inter-continentally. to do we board need domestically we nor nor to neither have long plane travelers continentally travel to comfortable on somewhere right are

the some slightly common Google do participating any one platforms sooner regulatory is mean, they happening that competition I are action, mean the few Google's thing in some in read an is that terms in something environment. and ultimately regarding there that quite consensus so notably not situation than they why the of point-in-time that the companies. not that On have With they in. skepticism right. recovery kind they happening countries second should of effect increasing at a most only think are we of they practices. that And into our mega their of U.S., an on is are overall and in that is the that overall our but it's the that's now competitive other in take have we there some it's I benefit investigation And is time question your fair showing that broad segments will travel

Next please? question,

Operator

of from from The Deutsche next comes Lloyd line you. the Bank. question Thank Walmsley

is line ask question. open, please Your your now

Lloyd Walmsley

two questions. Thanks. I had

total First, half when segments, reported two advertising Tri what's and revenue. [ph] public, then advertising, of and they Ag their was search over

the XX% I puts and saw to contrast more sponsored good out million can through And travel, you've kind think revenue, prescription doing beyond you have one, price can mean there EBITDA they've us how where maybe percent So, talk a ads you segments growth, and a more U.S. in they're XXXX looked maybe little competitive what sense XX% we public this done? to at the takes price And give you strong user your maybe display rest comparing doing less and attributes. in then margin. leveraging moving lifting of that your of second have as in the revenue. other categories are Curious And other of comparison but and comparison scale a $XXX to drug attractive to raise just - ever explored if in brand to

Axel Hefer

sure. the Yes, questions, for Thanks Lloyd.

lifting the and our business question opportunity first The sponsored on display our for products.

that depending are at much that on revenue the can I accommodation. competitors flight of Ag looked mean, on the business sure you am were also understand, was coproduct. CPC only Whether spot course the us their I skew as the revenues their think more we side. IPO, much we towards as on. the and has and of significant revenues an at realized stronger accommodation far and Tri there And player just is the is are opportunity that to pretty reach search levels I we obviously time not mix increase given versus there So, I XXX% of reached

we volatility significant So, market. overall what year to try so I'm is at believe I we've the in at they point-in-time share are also and expect right I we some products that that given opportunity. much But that's right our bullish would share do that now sure have potential and the feedback in there seen a we additional the next are you've yes, our heard But to not from exact lack to view would time on as that better what advertisers. a are Ag. But is. hope quantify the perspective very is a what the Tri

Matthias Tillmann

our Lloyd, that. this brand. obviously a we I brand that’s years on question. global travel around we a do hi into invested that have many and have lot mean, Matthias And we mean, result of is And interesting a second built that I as Yes. believe thought. very travel your strong for equity a have

the for a into right if I'm completely for setup. you different timing sure. would be not that lean fields, now we so, were that that. And go very a sure to shift Overall, have bigger And is that perfect

teams key and key past very that it We the opportunity have made where the that's pipeline and are we our work effort. has want very travel. a full to everyone exactly strengths product where far and do we to been our where we team And that work to I and be. we and of always also And knows coming we we with here knows day think And in are what every exactly one focused. on focused about and in excited are all to that, were that how

that So, travel say on do interesting product opportunities I strong and But never and brand. our all right again strong have I it's with a we now, exploring very continue our should thought. our think never with global we teams believe

Lloyd Walmsley

you. thank Okay,

Matthias Tillmann

Thanks.

Operator

next Thank JP Anmuth the comes Doug line from you. Morgan. The question of from

open, Your please your is now question. ask line

Doug Anmuth

Thanks. alternative give recover potentially path change year. hopefully thoughts next the and you're just accommodation markets forward. then then, campaign us European about you more there And Great, was things how you of some give can that the did progress you us thanks mix on an with brand update in your messaging and just thinking going taking questions. for the and curious I could just more also marketing hoping could as Axel, on some your how

Matthias Tillmann

first will little second on your the Right, I take a you. would thank about component, the brand then talk bit question Axel question.

year next And we So, we a situation you is that summer peak time QX we and more us. the to was but campaign had for campaigns. campaign learnings. this understanding variable be. you formats back be of towards given decide good a already our step much And how environment next takeaway but different revenue pretty to only would that got season a to to tail few last And of our remember whatever that to have QX we creative from in to what won't we add have. very nobody is now out. was in year key new flexibility in have knew of test results to we TV trivago lockdown have, we than And with be would and in We that very direction got And valuable end the the now the by mind, kind softer in was April. new to year concepts of the will market give think some that of There I this very apply a already April if the got and year. turn messaging. usually there then, terms want us campaigns decided produce working positive in been And this the to that Mr. in close our and production interesting another learnings during zero campaign. away global turned a what this how and will and also lead started not by we different can what And I we specific good different has to out for of that all diversify now decision. tested now that was

Axel Hefer

your accommodation. On alternative question, second

think absolutely I right. you're

We happy end and in invest really we accommodation, alternative are focus 'XX. that significantly very of to started

the have important apartment very important to for all this summer was So, and was business really coverage inventory it available. our very

Given to and of you the that to the to lot users do to was it availabilities were have similar next top out dynamic. just your customers? booked nature available summer a fully we the and speaking frankly that all destinations -- here expect inventory need And for show

that market significant overall believe to recovering recovering the certain key for even increase with be our of through us. extent we share is to that and continue With key in market, were apartments think value will but apartments going the we a a normalized part a that a proposition overall differentiator to

Doug Anmuth

thank Great, both. you

Axel Hefer

you. Thank

Operator

we Kopelman from [Operator next Thank Kevin in you. from question question line comes And the the have the of one And line. Instructions] more Cowen.

now your open, Your line ask is please question.

Kevin Kopelman

any give in Hi, thanks quarter heading marketing what's On you your decline. much. expense, were If Thanks. revenue change reduce going an us in so on more marketing your with to so you update Can Europe. that on able there trends, the significantly third year-over-year than those dynamics into QX?

Matthias Tillmann

yes, very observation. Kevin. Sure, thank think And a I good you that's

as was you of QX around if XX%. our revenue at So, percentages spend or look advertising

our case TV invested that number. because to compared segment very in a And has only what So, tested Europe in develop or and Europe. done was low the that we've in historically predominantly we

more was key our pickups. again decent see end, focus did we And segments the cash. in Europe same during mentioned before, cautious. we're to the in other didn’t I opportunities And other see the we and on As preserve third as quarter our

that. That's marketing invest the to side. into also on So, brands wanted

And than then And advertising had what have also targets On of pre-COVID. when approach But before. compared that's saw still obviously target before. our on to strength, we than spend mean back really to previously that more in went those also channel we from is we ROI back and we running of we what we went lower I why and we've we're saw Already started in invested had in, the in high talked options this return the we cautious about see we than also test incrementality kind now what we it performance benefitted a similar pickup competition done our us. performance is a marketing that and for fact the also overall when more. demand, increased in we side, pre-COVID

if quarter a look spend the it's Historically the in it means So, what for been of us fourth at in quarter quarter. anyways. brand for and terms low investments you fourth

As we our and approach product demand same holiday the time more season, TV expensive becomes advertisement at drops. for

usually cut So, pick. we

If if XXXX right a revenue to of we gave, that a at it's a of you Europe the fair what see now have I in look the the points you quarter we share QX, you situation, quarter. don’t as on higher had level levels and expect data at assume ratio global third that in fourth that to in than look the

then take if the quarter and revenue. in of you XX% in terms advertising as third of we had the a So, look at spend starting that point

You the that sense? will a you That in fourth idea make how approaching the quarter. not we're marketing can our good activities higher fourth Does gives in of be this assume that quarter.

Kevin Kopelman

Matthias. is helpful. thanks This very Yes,

Matthias Tillmann

Great, thank Kevin. you

Operator

Thank you. are further Thank you. this There continue. at time. Please no questions

Matthias Tillmann

Many to facing situation QX participate markets. in very for of thanks are challenging Yes. taking many call. the the time in Irrespective earnings we our

for us market and to share. see matter relevant become This crisis the our An see thanks and opportunity. an stay winter is forward. next last. the products. your travelers face quarter. how has opportunity advertisers will with long more time, better to Many to continue what We our and opportunity is driving grow you No safe An

trivago (TRVG) 3 Nov 202020 Q3 Earnings call transcript