Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the trivago Q4 Earnings Call 2022. At this time, all lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I must advise you the call is being recorded today, Wednesday, the 8th of February 2023.

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 February 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 comparisons stated, for comparable this period be will XXXX. all the call against results of otherwise Finally, on

With over to that, Axel. turn call let the me

Axel Hefer

for desire very We today. joining The call pandemic our a pent-up the for earnings everyone, globe. travel leisure demand were saw year you, strong COVID lifted bouncing back around strong fueled during consumer us the Thank travel. savings restrictions QX and by as a to for was was XXXX trivago.

to continue prices for to more compare prices maximize consumers As accommodation their rise, need to savings.

the We become even are metasearch of that therefore more confident will role relevant this year.

access travelers direct product brand positioning. online unique more and We're traditional agency hotels we forward, core to offering. opportunities and further are by growth our Moving travel in our offering strengthening developing leveraging addition to

and valuable product our travelers to learnings them further allowing run test to In to qualify generate markets, advertisers. before intent expose new to a passing five how in their on we've QX, more prices design in us

direct And strategy, strategy, getting phase the coverage, more of around established are now hotel we rate consumer-facing those have and than close XXXX. in building launching hotel next of to blocks we will our of access. XX% hotel build addition, direct up we features direct our In the

Matthias Tillmann

Thank everyone. good morning and you, Axel

Axel year, and return with very we while points year-over-year our results. financial improved on Last revenue said, as our by efficiency, million, spend, are XXX.X%. advertising XX% QX percentage As eight measured marketing €XXX to pleased increased our full yearXXXX to

year-over-year, year an second year charges And company €XXX.X pandemic for XXXX of of impairment relative charge million, increase net recorded bringing discipline This to XX% we of we a the achieved of margin full is quarters combination marketing continued impairment in our EBITDA, €XXX.X loss the million. than over the led effect to increase efficiency XX%. of an and cost record EBITDA had most more third an excludes which time, Due the a first to in totaling of the XXX% €XXX.X greater profitable for adjusted XXXX. in million. of adjusted the and before The the of

Now, year-on-year, by the higher referral to value. quarter, continued booking looking overall in at fourth ADRs, driven our revenue average an grew led XX% increase which

during we the revenue declined like €X.X products million mentioned as €X solutions stopped white and as certain ads summer. year-on-year million Other by to label we display BXB

of driven Net the from million had non-recurrence government income was decrease €X.X a the decreased German of income. €XX.X year-on-year in million we received subsidy mainly as by by fourth The that million. and COVID-XX to €XX quarter recognized other the XXXX

EBITDA Adjusted net €XX.X year-on-year payment, our one-time this income by to also XX% increased subsidy million. by increased Excluding €X.X million.

three bit fourth I in levels regional the for our a more following, our to the will drivers revenue give the In of relative segments development referral on quarter. XXXX color

reflected as bidding recovered in in Revenue the to XXXX the above as with roughly and XXXX our ADRs traffic per Europe, same qualified of Starting referrals levels, referral XXX% quarter. continue at partners qualified were quality. levels at the XX% levels developed be of increase to XXXX third levels level of

In quarter, large-scale the fourth from qualified in significant qualified in that driven third Americas, to in to Brazil to referral the by quarter qualified market decreased relative in test led XX% XX% mainly America, levels primarily a resulting from a that country. XXXX sequentially referrals declines decline slightly referrals in in Latin

However, on the a on flip conversion had referral. revenue positive Brazil, in side, which significantly impact the click-to-book our qualified per increased

Similar continued to relative benefited in Europe, from Americas XXXX ADRs revenue per also levels. qualified referral high to

an we exchange ForEx per referrals of revenue to positive observed effect quarter, of what addition, leading In XXXX. mix the relative XX% already America similar qualified country in to were overall third in to and increase

and Consequently, impacted our Ukraine levels during Lastly, the our remain by qualified fact be segment to was continues war China at mostly the significantly referrals XX%. of that in closed still quarter. Rest World the belowXXXX

rooms a platform, not expect China will on which in travel ADRs. Chinese as opening and for to be believe impact a have platforms While we demand hotel for be will agent we we of region will increase us will many the that the travelers operate the positive China do possible to for it again Chinese positive

sequentially We the a already qualified of QX. positive revenue from in increasing referral observed per XX% XX% XXXX in quarter in from improved and levels ADRs impact fourth QX to

advertising to expenses. on Moving

we entered quarter, quarter we the have always low back in pulled season our on fourth expenses relative to we third quarter done the As advertising as historically.

in fourth our continue marketing the ROI our as be in XX.X% of compared and the efficiency. period to to we marketing referral same with disciplined in XXXX were expenses XX.X% targets Advertising quarter revenue improved

percentage to in fourth Consequently, XXXX our spend levels. points advertising quarter improved the XX relative return on

into XXXX travel to relative we and marketing to XXXX. of our contrary last investments in selected demand year, in expect some brand we brand started going in markets However, of to to campaigns increase year continue end TV new at anticipation the to quarter the run higher the

other expenses, operational decrease lower marketing to were expenses, advertising the period million depreciation. operational a excluding by decreased main In X.X% compensation, I by share-based to lower relative in XXXX. quarter, discuss expenses, The same share-based compensation the compared now our year. including expenses, will last expenses for the our in fourth drivers decrease €X.X and

a label of costs expenses acquiring sunset TV as result commission lower we for and as our to traffic product. production started fees Other decreased marketing lower white

IT-related partly to independent expenses by as our an due offset and was for progress in setup The fees the costs, onboarding we migration to costs from data hotels cloud cloud. increase center made in in decrease an with of increase the mainly

As mentioned to the have we of have in through reduce before, XXXX despite we pressure, inflationary relative to XXXX mainly reduction we expenses operating half done in second XXXX. expect the the headcount our

expenses, operational quarter. advertising for line quarterly be and excluding this going share-based have forward our in expenses expect reported We what we roughly to compensation excluding with

XXXX and short-term million cash, equivalents, investment of of a operational strong to to performance year. to December €XXX.X led position our The at in increase XXXX million as compared significant beginning XXst, the the in cash €XXX.X

by Australia. results, The resulting which strong increase more the from financing repurchase shares of from activities was €XX.X offset driven than of payments million litigation and the operational mainly penalty

position debt-free. and to be continue ever, liquidity stronger than we Our is

As we to continue to the expect shareholders future. free different cash in will generate to positive continue return flows, to capital we at our to ways look

moving in January. on to Now, trends

and As result revenue referral trends due at expected, over XXXX. of travel a to was corporate-related January travel year-on-year growth XX% restrictions demand in strong robust comps January continued favorable in as

monetization relative years, in at in year decreased to we January. levels prior sequentially as overall, January As similar December. in last monetization levels were And

qualified per ADRs referral qualified our referrals. January, as strong and than to increased However, booking more year-over-year be continue conversions revenue in improved,

Developed QX. both consequently, healthy qualified revenue January. increase saw Europe, qualified particular, and comps in And referrals in referrals easier we per from in a benefiting in

started We beyond marketing TV in brand to invest opportunistically also advertisement.

Nordic which and partner Poland, For our France, like Handball World we Cup as believe region in core main example, Germany, we in Sweden as the positive the European on or impact traffic Spain. well of were had a the markets branded

our expenses to the months. in to We be in marketing continue expect invest to brand activities will and brand coming able increase

be which Americas, by test In to large-scale America. in America, qualified down Brazil. partly referral was in a low by single-digit the referrals negatively Latin qualified offset market continue increase double-digits, referrals North qualified were In impacted

compared Revenue referrals foreign the around XX% QX. and year-on-year per in the the monetization fourth were lower increase XX% effect in to year-on-year as qualified mix quarter decelerating segment, country positive and/or exchange increased from

a booking we effect. average values in XX% around year-on-year. year-over-year, driven increased and in World, referral significantly, Consequently, mix of qualified country positive increase Rest revenue while single-digit referrals conversion, In increased revenue by booking have in increases per qualified January referrals strong

still continue to While ADRs the robust, underlying macro be levels. remain uncertain, the trends outlook is unchanged. while at to be near-term elevated continues Travel demand

do While not change more we believe stay, destinations, some we to trends of shorter lower changes see continue in behavior length consumer these cheaper more picture. in offers, hotel on overall the clicks like interest or

platforms. We for make find focus shift consumers is will as improving it to the savings, cost metasearch this on easier well-positioned on environment and believe great deals to our that travelers we user experience and in focus even their

increase strategic traffic pleased further hotels, are and exceed progress very financial have and investments to driving increasing we pre-COVID strategic that We our EBITDA of on initiatives. are we marketing, still believe we with made summary, In our branded brand to in positioned XXXX. key independent XXXX into projects our in key adjusted while results to EBITDA execute coverage the year like with thereby full our the XXXX growth expecting adjusted well

open now the line let's take ready the questions. Operator, are we for please. first With question, that, to

Operator

Instructions] [Operator you. Thank

question White D.A. your The now open. today ahead, Tom Please of from comes is line first the Davidson. go line from

Wyatt Swanson

operating you first taking Hey, access direct offering. travelers Tom. this is traditional to hotel Thanks addition is in for Wyatt Swanson mentioned in opportunity My on to the agency see travel for online our the you questions. the one

your level just bit relationships roll properties about your a in already all has this on the of with it incremental trivago required listed markets? out and deepening talk be might platform? what Or is the globally you existing to more about that leveraging Can investment

Axel Hefer

Sure.

do and One are So, to pay the infrastructure onboard connectivity, we basically additional an ways two existing the where have to where for hotels there platform. an the already is connect we we need where hotels. to basically

technology come not does that So, at costs. additional

we have what end And will with where by The talking ramp-up with stay was about, that and get in spent investment of do QX. XX% the have coverage allow expect we in other the Matthias year. what do one line to costs, our to we partnership to UBIO, cost us is

Wyatt Swanson

And my you. one. Thank Great. second then

In going this production? in tested? were test in can going full the qualified you changes exactly test drag in Americas, What you of will bit on QRs terms Americas the And significant Brazil? forward? market the the referrals decreases full into on Is a more detail provide

Axel Hefer

Yes.

that So, those long-term often markets have being markets learnings to of basically, we behavior. done get very and not markets a flow from more out rolled different and We've -- those taken past. user something Brazil in five that in done user we one have the flow

as to that, we quickly. doing But that means you by they users options. out that Americas are which they basically there you which are book. And And we has see a ready out click what on qualify exposing see lot what basically when users the is not different on the we're on overall rate they negative more clicking that's to and numbers. saying a so that positive QRs what a And RPQRs, are more impact further, impact is

Matthias Tillmann

qualified add on design forward, of a where going I we have color And might impact in that, test, the impact. did similar referrals, of to et I we just cetera. the But mean, January, to terms on gave a bit change

So, and change lead few again. that a there might distribution be clicker a in changes, to could

So, referrals going markets. test will how qualified those point it's this in not clear impact at this forward

Wyatt Swanson

you Thank Okay, great. guys.

Operator

today Thank ahead, of from from the you. go question UBS. Please your open. line Jeremy The [Indiscernible] is line next now comes

Unidentified Analyst

questions. two have I guys. morning good Hey,

from into any early might first is how how year? what trivago? European coming Google you will this have Do DMA impact of The it impact see we or this indications might gatekeeper impact effect Travel the rules

you at out is is, believe the called December in trade-down widening in XQ behavior specifically and our second consumer Thank you. the the Europe out, And call? conference I

Axel Hefer

favorable will DMA, the XXXX, tell, do be also approach the in of it's on the very, expect We too the reaction on early it very first bit much then competitive and we depend predict. prediction to Yes, be. How by honest. clear Google. commission effects will what What lead to to that the a a solution -- and of yes, will And environment exactly impossible is is for don't is really us. good a better, again, more much to have so, it

Matthias Tillmann

strong last remain length all And your XXXX on are seeing the than fourth ADRs trading click platform But being our then in mean, by in the second mentioned XX% all, prices we we stay. reducing as in higher quarter. on question, I down quarter, consumer of first segments roughly of with

that have We seen in all segments.

flat while of was quarter, fourth was higher, Americas relative levels, the third length was toXXXX improvement length in X% compared an that drop roughly stay to Europe below quarter, which levels where In QX. stay XXXX of roughly is the in in

also QX we number slightly. are they in So, now the dropped saw that

increase seasonal end and share the the compared We all four that year in for also see XXXX. less was click to of in in regions, the slightly our towards Europe decreased year pronounced prices the And last five-star click year-over-year. hotels out platform on typical

strong, So, as presumably I to ADRs guess, conscious. we more are price consumers while are becoming seeing remain offsetting we effect expect some

Unidentified Analyst

Thank you. Great.

Operator

Anmuth of your is Thank you. The comes ahead, line today from from next Doug go Please now the question line JPMorgan. open.

Unidentified Analyst

This for Thanks Great. Doug. is two. I my taking on question. [Indiscernible] have for

long-term from have here target? near-term? thoughts could in So, said, then margins it the follow-up. in comments the to right seems the you over I And strong one, is around I XX% is further drive OpEx. that with mean, share your first the where And margins But able could in to a margins expansion on the And you're in years. possible improvement go your

Matthias Tillmann

[Indiscernible]. Yes, sure. Hi

repeat So, margin reach our to XXXX goal in our least continue levels. that revenue we goal long-term to revenue at that is And on to is business we be consequently, is more mentioned but baseline, traffic. the high-quality focusing that XX%, we in did EBITDA be XXXX. will our sustainably our than and disciplined important And the -- from post-pandemic investments. with us will to reach marketing hitting grow past we and And

would However, do the our even down. growth if see to expense do go it we short-term if invest of contribution, accelerate will to profitably we at means margin that that opportunities temporarily our

investments. to our expect brand do marketing increase we XXXX, For

hindsight, peak with of the we was the our we because strong. benefit in could own more year, particular summer last period believe have and during also invested As auction

not EBITDA we Having to we do go investments, XXXX said plan back do XX% to margin. that, below ramp while our to level, which expect margins up were

Unidentified Analyst

it. Got

Okay. guess, as And follow-up. I then, a

talked about ADR, there terms of being you still strong. In growth

here? down? then this you about think ADR guess going and is seeing level of ADRs any that, -- Do are that slowing So, signs I with from how think And you of do [Indiscernible]? you

Matthias Tillmann

your You but of think I were breaking questions. little a most bit, got I

are there So, levels. But why I'm ADRs say, why and the it's the good will at can dynamics, least at stay looking similar reasons ADRs question up, if underlying current sustained is these they speculating. difficult I at that at are to Obviously, or be levels. think

in higher that certain and And we the year, that ago. than season, particular, it energy well. peak have for supply in increase popular hotels a they was cost and if in be to would reason I shortage, ADRs last still going cost on year to can particular, by tight summer we or destinations. And case you these seen to labor the the can that as were In are in destinations, consumer. if they were And see I prices expect increase, driven holiday the still forward continue there's drivers, a the pass mean,

that is that We can coming but called do I our the But what given cannot are So, also it's levels from we down. And again, that, not least we related answer we demand have question? -- out, in are see seen and in try mitigate signs lower that overall overall as not in your we change drive now do the that Does that predict because see what what effect, at is, behavior? the people consumer of numbers. demand year will last see some then to seeing a we January, question future.

Unidentified Analyst

Great. Yes. Thank you.

Matthias Tillmann

you. Thank

Operator

next ahead, is Please comes Ron the go line from your line today The you. now Thank Josey of open. from question Citigroup.

Unidentified Analyst

[Indiscernible] our Mike for taking on Ron. is this question. Hi, for Thanks

you. China. seeing that potential now And have there? early potential restrictions benefits lifted you Can you there reopening recovery about maybe mentioned been of be in talk the maybe COVID could Thank size as You might the any the frame you from uplift impact the accelerates?

Axel Hefer

So, yes, platform in China. absolutely. We operate don't a

other Asia. the in big one and And travelers. twofold. not seen So, outbound increase a from Chinese is yet. are are seen and significant we Bute cities the and ADRs have into into Asia China. in benefits travel expecting western particularly seeing in bookings China we latter higher searches have and from that is also The more One obviously

impact is difficult to The overall quantify.

in into China. some restrictions still have place We travel some markets in

that So, effect to But tell to trend quantify and expect year. for is the early to we do it too accelerate. this exact

Unidentified Analyst

Okay, great. Thank you.

Operator

question next the comes go The Kevin is line from now you. today from of Thank Please open. Cowen. your line Kopelman ahead,

Kevin Kopelman

Great. Thanks much. so

So, a couple of questions.

to a First sense of XXXX relative January one, the on us look those revenue give for can specifically? like gave, you you what metrics

Matthias Tillmann

Yes, can you I give more bit a color.

However, profile comment a pandemic. as now, have XXXX at margin years and and not levels revenue our before four deliberately different trading rebased I it's the been we on than gross

the that So, meaningful, at is think how now. and year-over-year our comparison is we business look more we

me be see let bit But year-over-year. a specific with what we more

continues robust. more Rest I North demand in qualified in more of referrals increased decline to due year-on-year decreased in be than and increase As XX% than around to year-on-year Latin which offset by Qualified said, referrals in Europe the in Americas slightly America, World, America. while the X%

Revenue and and XX% more in in Europe around Europe and Americas per in around of than Rest Americas qualified up World. were referrals slightly XX%

other then more mean referral thing that I mentioned call up to than globally. XX% revenue was one out. I year-on-year And

was percentage and levels You February March a in relative lower that of should mind as keep to in XXXX January XXXX.

bit revenue model year-over-year hope everything I So, you. will effect. more the gives figure and for for to quarter color just due lower be comp this else a January than the numbers equal, being helps this quarter to the you

Kevin Kopelman

Thanks. quarter-to-date? different just how platform, Could Yes, about QX, kind has average you QX the on for sure. Thanks for trended talk on then that. bid question. intensity And of a over

Axel Hefer

Yes, sure.

channels seen both level in also seen we've a which performance common but was December on platform, QX other and And is so decline very we So, on bid intensity, engage seasonal of mean, strong. marketing into competition in. platforms our January. from quite that high we've a I

intensity in seen to the what in we've is So, current compared QX. January bid -- bidding current lower

Kevin Kopelman

Perfect. Thanks Axel, thanks Matthias.

Axel Hefer

Thank you, Kevin.

Operator

today line from you. Thank ahead, your next Fargo. from open. Instructions] go The comes Brian the question Wells Fitzgerald Please line now [Operator is of

Unidentified Analyst

Brian. have [Indiscernible] is and mix your for this good a question. for alternative of hotels Thanks our Hi, accommodations. we On taking platform,

in seen far for year? alternative question and traditional QX is, in this January in you the divergence my any so versus have So, trends

Matthias Tillmann

Sure. Yes.

out alternative to our click-out the we called during pre-pandemic. that share last had already it I back on before and platform. trended of So, we had the our mix that quarter, But think accommodation increased even pandemic

right roughly trip pre-pandemic levels it's now, city travel as levels, XXXX So, mix. type flat with as in approach well our

with trend travel the have particular, honest. And and a city in recovering travel we to towards that and is seen trips coming hotel, and international unexpected, of not reversal be back,

think meaningful going our share forward. will for has traffic stay and relevant I mix alternative a So, accommodation users our in

However, us. value higher comparison the and proposition share key than for alternative is a hotel has accommodation significantly price

Unidentified Analyst

Very you. Thank good.

Matthias Tillmann

Thank you.

Operator

Instructions] you. Thank [Operator

There ahead. pass at are to this over no additional for back the go questions to closing time, like conference remarks. any Hefer I'd Please waiting so Axel

Axel Hefer

taking your in participate you to earnings interest. continued for We the today's call. time Thank appreciate

and operational year proud the are achieved very the come. We very results we year of are this to by excited

the the confidence we you more to and next is our in see our reach focus strategy, Thank years Hotel giving of and that quarter. us continuous can better Our with price, much travelers serve start on very come. positive you combined Direct users

Operator

you call. for your conference Thank participation. This today's concludes all

your lines. now disconnect may You

trivago (TRVG) 8 Feb 232022 Q4 Earnings call transcript