- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, thank you for standing by, and welcome to the trivago Q3 Earnings Call 2022. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I must advise you the call is being recorded today, Wednesday, the 2nd of November 2022.

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. responses Wednesday, questions November including as management’s discussion today of X, following to reflects your views The XXXX, only. undertake not this does any update to trivago or information. obligation revise

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

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

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

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

Axel Hefer

everyone, QX Thank you, for call today. our earnings XXXX for joining us

Looking save prices third money. quarter, users this in experienced the were spend restrictions the summer. travel have back used our opportunity at strong In world, environment, though helping sharply to willing services, have lifted seen of parts inflationary strong Travelers the most even we’ve across the people a have COVID have been risen world. very and year. to we this demand for

own adjusted our for would Matthias employees very are I customers quarter. our projection. performance, as with EBITDA happy strong our We our cover exceeded the and strong thank shortly. the we will to like And details operational

to that will believe inflation shortages we continue Looking drive traveler. prices of labor forward, and

to change accommodations grow the and the comparing on spending consumer compensate in their months, behavior especially software to the Europe Developed and adjust higher choosing we consumer XX trips, for Nevertheless, In of expect seen we length slightly lower stay terms started overall as to consumers of have prices the segment. QX, rates, platform cheaper this contracted, for going our demand. signs next first destinations, travel our expect behavior in travel in shorter travel in and more. We absolute

is to and helping our are outlook on this we money, proposition core our continue done year, we’ll positive for we value that users with to business focus next optimistic summer have results. a As save very about as

Matthias Tillmann

Axel, Great. morning, Thank you, and good everyone.

the summer We Hemisphere, the strong and out our a is in very season reflected in are Northern coming third of that strong operational in quarter. performance

year, than which impairment assets and to compared adjusted last adjusted excludes €XX.X the of million EBITDA we was strong higher highest year-on-year to the result those doubled an a combination goodwill auction. factors of XX% and higher intangible quarter, this Referral that the traffic Our led company. our our with more EBITDA, and in values, recorded history in regions. Revenue per healthy average in quality increased Qualified Referrals as focus of booking Revenue of The on all a increases quarterly

by looking let at on quarter highest the development Qualified are line we there and in our July absolute On XXXX. Qualified stable approximately a volume Revenue referrals still increased at Referrals in year-over-year the color you in the Referrals level, a seasonality. above Referrals XX% XXXX pre-COVID global Qualified of Sequentially, reached remained Referral levels. XX% with bit more per some in the Qualified and me comparisons, our Given give Qualified noise third versus

per driven by average Revenue was our increase XXXX, levels conversion again. reached and versus in both value, while up mainly XX% monetization XXXX Referral an Our Qualified booking our

in from improvement to Referral sequential a drove Revenue to relative quarter in both second values booking the XX% in the average quarter XX% higher So third XXXX.

from XXXX the slightly the were at down Referrals Qualified levels, of Europe, Developed second In regions. the in at XX% Looking XX% quarter.

year this in the everyone the in our traffic return, we particularly effect. with long-term we rules optimized the volume, positive in driven remind disciplined comp XXXX, is for sequential spend, optimizing channels, decline third and quarter me largely that performance by remain for [ph] our whereas Let our marketing

In in the our in addition, markets. of last core cost and auction performance competition to year higher increased some with marketing channels this due

happy side, brand in have creators, European the performance marketing brand the more and we with On were of new in very invested could our some markets. into hindsight,

in driven However, Referral due more to was macro Europe, per disciplined roughly shorter monetization and XXXX levels. and length spend, booking were X% average an In the around stable increased by flat nature to only booking took Qualified amidst increase offset strongly remained by Revenue by up less in of a ADRs the Americas, flexible at XX% brand partly compared XXXX. conversions roughly XXXX, volumes. stay, Qualified approach. high of we versus approach cautious our and marketing mainly increase higher uncertainty, Referrals was of

Referral with drivers more increased significantly XXXX, in on were We effects, are other by regions. to good around XXXX, we value positive together segment, value. results that compared are to and The of happy the Qualified had a per TV XX% no average hence than in summer Revenue main to average our believe increase stay to on an campaigns and the flat rebuild our baseline. XX% the and in in brand track Length of our which effect compared higher booking of booking ADR currency segment. led was roughly

the increase slightly higher Referrals. to contributed per in also Qualified Revenue addition, of In levels monetization

compared World levels slower Qualified were were to at Europe. XXXX western to of up headwinds the increase XX%, of disruptions values while markets, around Referrals to lag due the Eastern monetization Revenue in of markets Rest of still Asian currency are booking from and XX% recovery compared segment XXXX. in quarter. XX% higher was the slightly offset that average mainly XXXX recovery Referrals in lower by in XX% at second Our levels down to the Qualified due some all slightly levels, still continues from per to mainly

Moving expenses. on to advertising

long-term of ramped market, northern increase and levels line season attractive up the with in our was in campaigns increased XXXX at many the in our western marketing Coming the brand in on seasonality. period connected the ROAS the result the to into XXX% in hemisphere, summer compared fourth the in and same focus Global efficiency the our during reaching improved TV. third peak ROIs. quarter. spend invest sequentially; we in our results saw we started of XX% marketing our in investments and brand core markets strong With decrease pre-COVID only expenses to plan in XXX% our We marketing summer in with selectively travel by out investments TV XX% of demand XXXX, quarter to our season

costs, to that same related like on The end structure product. reduction time, discontinued. our increased our third weekend effect IT X% compared expenses main no on cancellation and in complexity products we with Consequently, will resulting same in have to we the the reduced expenses. by or XXXX. quarter costs. expenses, Excluding core this higher to business increase product. in advertising the we shifting a start impact headcount period we expenses, be and professional in and some had fees million our stopped by people the third In we At operational the in The and compensation our services the towards fees QX that insurance for year non-core for development cost €X.X projects product IT to our of our incurred quarter, higher related drivers consider certain focus our

equivalents inflationary cash the million despite contribution to non-core million XXXX pressure, of the deprioritizing of and the results forward, reduce The versus shift headcount on operational to the Going and while be investments strong approximately €XXX.X was driven to of to increase expect million September operating short-term XXXX, our XX, of product, quarter. through €XX the Cash, period. beginning €XX by million by projects. expenses cash amounted compared third in to at we long-term of €XXX.X from core focusing mainly able as mainly a deposit, in million reduction our from €XX short-term

We in free and return we positive continue flows, strong be looking shareholders future position at to given cash currently our to ways the and different future. capital are expected to debt our cash

third million to the a operational deterioration the million. Due in strong in continued section more and loss overall inflation we our a of of increase quarter results, As one our aggregated net events rates, price subsequent purchase founders, charge impairment interest our of as Vinnemeier, financial economic test. an XX impairment in Peter the annual A €XX.X uncertainty for recorded US$XX the an million. €XXX.X rising an statements, macroeconomic in as result from of had Class of our million, agreed We we conditions, example, respect including and environment. Despite to of of noted shares

by million impaired our and goodwill Our were million. intangible assets €XX.X €XX.X balance was impaired by

first X-month and million respectively. million XXXX same XXXX, was million to EBITDA As period in third €XX.X compared the increase quarter the XX%, the million €XX.X and mentioned, and in XXX% of adjusted an €XX.X respectively, €XX.X in in our of

of During our exceed higher of million the million. now million margin the our our EBITDA expect full EBITDA XX%, over €XX.X long-term period €XXX.X goal a XXXX time. XXXX €XXX last achieving year year months, EBITDA with XX-month first a than XX We adjusted margin was full adjusted for adjusted to of our significantly pre-pandemic

EBITDA details our adjusted earnings expect we in we an view our during more updated to will levels, XXXX share next XXXX, again For outlook XXXX exceed call our February. and on and

to XXXX in trends, XX%, a remained at of roughly so October, compared recent as third the quarter. the Looking Referrals Qualified flat around percentage

Revenue around Our dynamics per Referral healthy. to be auction remained XX% above as levels, continue Qualified XXXX

and Revenue compared XXXX relative and Americas quarter. per dynamic to to at around third but October. also Southern was scale Qualified to In influenced to Referrals large Qualified respectively. approximately of Referrals XXXX levels, result, Referrals in volume, XX% October Revenue around by higher in slightly levels Qualified Revenue Revenue quarter around remained Referrals stable The Europe, stable XXXX Qualified XX% in at of As October segment, third roughly our Referral America. Referrals levels. [ph] remain in XXX% Trends both per while slightly above lower per Qualified a in our stable XXXX improved of process of the decreased were also XX% levels, XX% the slightly

In to consumers roughly We search for contrast, while October. XXXX Referral macro we segment, continue continued stable XX% in stay excited to Qualified In positioned Revenue of versus Revenue for on around see XX% Rest and Qualified consumer well see to the Americas of tendency of not this length winter XXXX, choosing October. and quarter significant cost As deals and in of see levels, near-term in Referrals that We are per is savings shift help and and trend remains while pandemic, in more third around of and increasing is be and profitable of And Referrals we is our to outlook to as see levels. of the accommodation. season also XXXX try that cheaper seem behavior shift Overall, to consumer stay focus result, flat World believe are a XXXX to this in ADR our we similar focus by platform. XX% I our users in affordable profitable the on respectively. In mitigate out XXXX. was in find paying a do more the picture encourage of great the summary, upcoming roughly much the were behavior towards changes off. effect coming growth business, consumers shorter are our in we length to Europe, their uncertain, to compared during accommodations started searching

the levels. to With our sustainable Going current for from are questions. line we determined forward, open business grow that, let’s at rates

Operator

We’ll Thank Naved Securities. first Khan our the [Operator is from you. go of take Please from line Thank Truist This question. ahead. you. Instructions] now

Naved Khan

Yeah. a lot. Hi. Thanks Thanks.

So questions me. couple of a for

I the more – which [your in or give of some I you that the conversion, markets. for intensify shortening stay, also through [ph]? click markets length people And competition this links? you to us have seen Can increasing think about in this as be may the changes about, us? on you is specific give quantify you’re to you other spoke can marketing, the The question you downstream of any the be First, And in within? talk process] just further to when do may had around some seeing

Matthias Tillmann

Naved. you, Good Thank Yeah. questions though.

to we give then in and it’s it’s first range But reflected rather your Europe a Americas, gave between on is And regions. was ballpark a as I on of mean, – And for in Rest bit that’s World. So of a just volatile. it’s in length flat. there. so the I change to of no kind XX% some and really where data value, I But and there saw we decrease to it both you stay, XXXX, average be question, see said, mean, the X% in I points booking clear,

not third in it in see markets World, And be with think then forward. side, comment auction seen obviously, markets, markets to Rest versus a mostly bit in to don’t they – in didn’t by in levels, was optimize are we in but that market. Americas there conversion And are they meant some me the where costs. a And the in and And increase and happen my was sustainable, whereas it’s the then the because not look driving XXXX, thing roughly of quarter, going our an bidding segment, is have saw maybe what But couple similar why still bit volume when of in we XXXX, to overall it we higher some speculating advertisers think it’s my the where But in seen adjust absolute what But, Europe, up cautious, rates. maintaining We On we we some there stable entered every our higher. country, have that, on so our for was the particular, yeah, will ease local in October, we bit downstream continue stepped the would conversion, contribution. there. market, at bid relative that can for levels. that I slightly difference marketing It expectation Americas advertisers that? call profitability, at let a in at conversion the market as is referred we target, different could one players lost Europe, in where where said, and some core a little not every that we there. out I compared up, from profitable were they last and year it, while to I

Naved Khan

helpful. Okay. A if may. I That’s very question, follow-up

about So projects, about kind those. thinking there monetization directly think on and more I long-term give in the drive how talked you the hotels, should timeline – in of the of coverage here? be of kind and talking expect increasing about to detail and multiple you What some us terms we

Axel Hefer

Yeah.

to have as said soon. launched of coverage our we the that couple we’re relatively So that coverage, will on difference our confident direct-hotel a a we quite speaking new in on shareholder letter, that initiatives make

XX-month. in think So a we we in [Call see coverage Abruptly] that Ends do will improvement noticeable the next

trivago (TRVG) 2 Nov 222022 Q3 Earnings call transcript