Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the trivago Q1 Earnings Call 2023. [Operator Instructions] I must advise you the call is being recorded today, Wednesday, the 3rd of May, 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. The following discussion including responses to your questions reflects management’s views as of today Wednesday, May 3, 2023, 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 reconciliations 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 the period Finally, unless otherwise stated, all will results of comparable against comparisons XXXX. call on for this

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

Axel Hefer

everyone call earnings cheaper in been the on reopening In inflation, Thank remained in strong QX us quarter users when our today. and has the recovery Demand joining start we you, our outlook seen has economic we've trips the the And have driven prices seen uncertain. by first the China. Japan a shorter robust, and to for negative XXXX for of Asia, in comparing effect mitigating and shifting trivago. Western of markets, of destinations travel our

to positive our expect our growth traffic. In continue our to activities value we and continue every In to our our quarter, an of activities in environment, branded the we've communication where into everybody's are first marketing a of direct on have and ramped the traffic development fuel to preparing day, solid up top price mind summer. comparison is the our marketing and of proposition brand of seen brand brand invest

bookable markets. comparing accommodation. prices Our product coverage our directly test the threshold proposition, of made focused progress on core development our We've improving and XX% for coverage rates have in good to be value on surpassed our continues

been improvement comparison display has accommodations dates. the area and of price across Another focus travel our

that We the expect will are about yield later excited improved to users the competitive and proposition in improve our positioning. to these improvements our value year

Matthias Tillmann

and morning you, everyone. good Thank Okay. Axel

Let for open our through in before up you it briefly financial the first questions. we quarter, me walk performance

a recovery elevated mentioned, Axel continued and Europe in the The in average Rest revenue of January XXXX to World. values. had exceeding was we a of travel year-on-year from strong XX% year restrictions travel booking start demand As Developed largely growth in COVID-related with as and trends robust strong by segment, January, result the driven growth our referral

cadence As XXXX, the February rates the a of and in growth in result the of recovery first our of March. decelerated quarter year-on-year

to we the segment see in in Americas. did uptick decrease last in as year-on-year in a In not year, our monetization addition, same particular leading monetization

first in XX%. growth quarter referral the Our revenue was

we million, Other second revenue the year. phase to in started ads products out as €X.X half last declined certain display BXB to like of

XXXX driven in the QX the income the against Our €XX.X of of million of by relation last to loss brought net to the year, a net €X.X ACCC nonrecurrence million €XX.X expense which largely was incremental compared was by million proceedings in us.

slightly Developed marketing have expenses in our World. we first decline spend partly return earlier a on planned, led which line as in of the with of As to the particular million in And up a from increase in marketing our decreased this quarter in €XX.X offset in result, The by higher only our first XXXX, brand €XX.X expectations. year, XXXX million ramped to in of adjusted advertising and investments EBITDA quarter referral was revenue. Europe Rest

referral compared investments EBITDA we our strong revenue. margin a of while lower monetization adjusted marketing In to summary, XX.X%, year, levels despite growing achieve last continue and brand higher to

to stop decided As qualified we mentioned in going referrals providing our and revenue referrals per qualified have forward. letter, shareholder

we As in prior makes referrals, volatility behavior the increase made product it of which our to run tests significant to aim these click-out periods. metrics value that difficult continue to to compare

helpful or is these model it metrics look that business to dynamics. understand underlying to not our at believe We

continue to comment the will our revenue of drivers referral we However, on key development.

give our did color, the X% declined own was driven So on our in the the let observe for largely dynamics first performance me the in with Americas, in monetization referral we a on up-tick last different to volumes our as decline revenue and profitability. you regions. Starting same we focus year not some continue auction by marketing loss as by quarter the segment in year-on-year,

demand elevated that marketing brand in segment. of In Developed travel in recovery the travel restrictions, successful the contributed growth to referral year-on-year XX% campaigns from Omicron-related Europe, ADRs and revenue

We in our segment observed Rest January growth revenue March reflecting improvement revenue throughout the referral quarter in strongest The rates the in to year. the referral strong deceleration World. recovery last from was of

in Referral monetization saw a Japan. We year. conversion, ADRs that values Asian last saw markets, roughly stable driven notably booking revenue booking as was average in strong an growth segment to by many elevated was period our XX%, while same increase and most compared in in recovery we increase in the

brand Now, in Rest the year. anticipation Europe marketing investments advertising a in of expenses, to strong and recovery of World on ramped up early we moving travel our in

XXXX. compared the acceleration quarter growth rate results, happy in to We fourth saw as nice with we the brand a in the traffic are very

As higher return segments. on decreased, as brand of spend result investments expected both our advertising in a

year to compared still the same contribution However, period revenue. referral absolute increase due increased in last the to

to two we Americas, continue by marketing was focus to algorithmic largely marketing In reduction in expenses spend driven decline stronger The expenses as profitability. other as contribution on advertising decreased in overall an the monetization performance in and our segments. decrease compared was slightly year-on-year the

XXXX period expenses our were advertising now QX in and discuss and by year. the expenses Australian to operational Federal imposed the in marketing I from last XX.X% relative expenses XX.X% Overall revenue last year. of our XX.X% same quarter up in the the Court penalty previous will excluding

the Compensation expenses XXXX. to in same compared compensation, quarter including our In decreased the compared decreased share-based headcount of result as first a operational period expenses mainly QX slightly to reductions XXXX.

is traffic, partly in and onboarding acquiring offset the due production commission of independent our mainly fading to the lower expected hotels credit recorded setup TV increase product was costs label as white for for on fee receivables. costs, an by higher IT-related This we fees trade out. losses Further,

our improved well further capitalized short-term cash and cash, approximately and in remained million We position cash restricted investments. €XXX cash equivalents with

second you me quarter. on let in give Finally, early some trends the color

by April, Our our declined rate low percentage strong period year. was single-digit last very referral as revenue comparable monetization in the a in

year-on-year. last of seen the have in growing our we week April, However, again referral revenue

The main trends remain stable.

regions and slightly elevated see higher booking length continues ADRs by of auction shorter robust, in Demand all driven to be by dynamics values average stable. to continue are while offset We stay.

ramp With a ability our the months, and into return advertising that, year-on-year up growth. investments in our expect we brand about the across upcoming on optimistic quarter all marketing as to we and further order three traffic continue in invest to third baseline remain We decrease brand traffic segments. second grow to future spend our in in contribution branded

further by to our of the will quarter revenues. expect second relative in consequently We in in to similar seasonal adjusted be marketing in compensated that a quarter quarter. the second expenses we And the increase XXXX will be first in quarter that increase EBITDA the expect the that first

adjusted investments continue auction more ramp-up years. our in compared that of will our a expect and as and a result of to discipline a XXXX, that year we For to cost marketing in investments normalization dynamics, the marketing exceed EBITDA XXXX full efficient pre-pandemic despite

growing pre-pandemic compared delivering committed In adjusted summary, are increase to direct our to well-positioned are margins investments higher to thereby and brand EBITDA traffic. that we we believe our

open we With line are let's that, questions. for the Operator, ready.

Operator

[Operator Instructions] ahead. please Lloyd to goes you. of And today UBS. question Thank Lloyd, our first go Walmsley

open. Your line is

Lloyd Walmsley

Two can. guys. questions, I if Thanks,

letter of being about with in the referral shareholder expectations. talked the kind First growth in line revenue quarter

earlier curious So just shift I how of something in from and the was you customers marketing do the more and expected, visibility from guess like in kind customers? much communication you get seen year if and broadly had

increased clients, how on Anything -- it marketing? do this among helpful. by just your or focus there second be from would And topic priorities OTAs. sense client? whether broad kind is driven the have share is any of this staying of is Are could really then one And clients' this seeing the your just across you of one this shifting you Thanks. you versus of profitability

Matthias Tillmann

question obviously, Thank start first with you, Axel and pass Lloyd. something at I'll it monetization control can the for your mean, on to then is I we let Yes me second least. question. that your

saw expenses. do we as to scenarios. we something at do on we it adjust prior based marketing assumptions look model our different and that years cadence take then we have we that's But and in ultimately and make comes the So

February. in was The basically comment when we already. dynamics to And at then we spoke letter auction hinted shareholder relative by in last the

and exact level bit that be we the saw monetization expected that's we know. softer. we So it's nothing something that to again But we then a

But I say would is then piece. line. it was And monetization in one obviously only roughly

demand The and rates. is average values booking other conversion

is trends And this So our said overall with we throughout goes and I hence revenue. the And were in there what stable were referral as line roughly quarter all referral into expectations. that expected. revenue

Axel Hefer

and the mean the the go focused of we I companies on mean, capturing volume as was one winning growth the the versus traveler the back was majority on -- balance profitability two. question the vast or over second focus traveler a returning I if your I there On mean Yes. recovery year, travel between returning customer. on

a But times with advertisers sentiment uncertainty mean further mean taking the on This And it's is every will environment economic is in obviously shift there some the more that I there our is a choose of instability balance different. to the case-by-case year lot and I growth general on obviously bit a stabilizing I focus uncertainty is trade-off. decision expectation mean more really to fading more the instability again. profit. And partner decision. is different a uncertainty. geopolitical

Matthias Tillmann

my seasonal seasonal just going into just that's And said I other been season. normalization a going going peak year one see just a now. season. a uncommon did into effect mentioned way the And monetization Lloyd it historically the has into an an Axel in in peak it was pronounced what I a so to in then in Last April. And for we more going increase see monetization not but way is I in not that And point we year, the think into pronounced us more was effect increase add think the vaguely right see April. Last to see remarks, normalization to now then we

we in extent the monetization decrease. year-over-year is this same year the did not to and to an that So contributing see increase

said addition So to guess a there's in here. what Axel effect also I comp

Lloyd Walmsley

Okay.

will of back Thank growth. to things start a bit optimism guys. move helpful. to you, little So That's

Matthias Tillmann

Thanks.

Operator

go please Dough, The you. JPMorgan. ahead. Thank question Anmuth goes to Doug next of

is line Your open.

Unidentified Analyst

on This [ph] question. Hi. taking the Thanks is Dae for for Doug.

the then it I could of like XXXX that And color And now. first for any play if the wondering provide XQ is had was for How mean in So expect secondly, with have on been go that so were to it what seasonality one, you was to rest shaping terms ROAS of you you back out? in year than how more ROAS you far? up you revenue. do have sounds higher I if could

should think Would on helpful. be closer relative if this about us to should that be more Any levels? you. or ROAS shake you you be to where ROAS could how would So it out to Thank provide color year we XXXX, XXXX? XXXX closer to should expect

Matthias Tillmann

sure. Yeah Dae. Hey,

me referral revenue specifically. let mean a you don't guide we on yeah more I So give bit revenue. color

from is in more the that what think and year-over-year for reason a we perspective color, growth than decelerated mean the XX% there's in grew in our second global for EBITDA on starting only levels, more still in But our some said referral level, -- revenue is rates and volatility, year. that that but the particular February also starting guidance and quarter the January And I more comparisons. I not it's provided I full controllable the more simple in absolute around some for March.

in XX%. -- quarter quarter we XX% quarter the the ended we -- So at grew the

as revenue deceleration strong year. negative. revenue referral in growth The April, I was slightly In driven by in last rate said, during uptick monetization largely that was the referral period

comps of last in effect again this lapping revenue referral already week year-on-year are we up as mentioned easier and getting was I April. the are As

was similar, look week very we different levels. referral the in just give April at idea referral when Europe Now Americas, In different To an in was at the you cadence flat regions revenue roughly year-on-year. saw of regions of revenue April. the declined we by XX%. high-teens percentage. April an still in in all in up was a And And again World, in Rest improvement last over it

shape that about referral how the and maybe quarter. hope color I think was how of of overall rest revenue referral you this the again. So cadence bit revenue for to gives grew and this a

distribution to in on share at QX slightly spend and QX. ROAS, our last quarterly a of ad with to of Now expect just we QX the be of year the higher similar spend expense

we year, overall have the particular spend. add As markets there as ad We active to to that said last our not been see we some in brand last to seen where an ramp already. summer you have and increase Rest year in plan to opportunity investment World plan we relative up and we given last performance of QX strong in

lower and little talk year, -- I about and we when expect is ROAS. will said reflected down mean bit by that a ROAS and last yeah, we we So XXXX margin to that relative be

at XXXX brand to be to be with the two we're than XXXX. the again, down I look But in last the to to we then expect still relative planning ramp-up in to XXXX year. XXXX to coming think you If ROAS range closer investment, quarters

Unidentified Analyst

Thank you, Matthias. Great.

Matthias Tillmann

Thanks.

Operator

next Thank Brian Fitzgerald goes go Fargo. Brian, you. please question of ahead. to Wells The

open. is line Your

Stan Velikov

saw Brian. related to is two I you Thanks the softness in our in Velikov for Hi. bidding questions. Stan taking Actually, This auction questions QX. for have that

in First, And Americas? was you regions? across think second, the this pronounced you more auction what why seeing are do in dynamics the quarter it various

Matthias Tillmann

can bit of I second -- Thank Yes. question. your and start complicated. I you. the with makes part it that a more mean

one and And think year-over-year. I it. are I look stable. one dynamics there made auction at sequentially sequentially how to is that -- is the are is So, comment relatively One things two

have summer we historically monetization So, increase the seen a in into slight going months.

a a comps of we April. a it And want And that, this you Last up seeing as pronounced. starting which that year, what bigger to seen from the we do year-over-year and bit normalization year April. part and the have roughly there March led In first in see stable to easier. are but was more take monetization -- getting so to question? Axel get far decline just roughly we're means now ticking And better to is of slightly then, January the

Axel Hefer

effect it's it's -- within different difficult because the of actually a then region answer, overall different those Yes, see so, that sure. mix mix effect I within that mean to a but regions countries and you the it's are advertisers good question, -- the obviously countries. have then of

mix, And advertiser-by-advertiser an So, decision a different it's have on than share decision. Americas, was then mix And outcome. than depending other country-by-country market rather more the the and you in regions. greater outcome the a country in

Stan Velikov

That’s Thank much. you very great.

Operator

The goes Mizuho. you. of ahead. question to please James James, next Thank Lee go

is open. line Your

James Lee

my here. taking Two Great. Thanks for questions.

is region you I you First break what of the year? across mentioned on ADR And if is for down your outlook trends guys shareholder and the regions. all think letter rest elevated was wondering can I maybe the little by bit. it a

is the a sense results? Any give in any can two, Thank Europe incremental of search you for would on of in for be helpful. any us like you. what that travel terms looked windows changes change of booking also length based stay? number summer color And And the demand

Matthias Tillmann

sure. James. Thanks Yes,

Let me value. booking start the with

Rest effect So in And XX% let's the it, that with know, slightly was highest regions from us it up an X%. ADRs, shorter increase and That the booking very more in quarter year-on-year, value in of increased length of similar the average all probably globally. had call first around, globally we as were than for you was around stay. offsetting World. slightly

low-single-digit to from lapping last as the we growth April the start we In deceleration in observed year. booking a increase average rate a

And in slightly see values the average at World, notable Rest were look no quarter. first in increase of different And higher booking last to stay Europe, regions still compared If compared Americas length mid-teens. April then and in the was in higher in year. you of we there to April change the

markets On recovery a question Rest first April in was last In compared and quarter. in year. believe first the Europe can increase in your a of as observe recovery I to level, to you continued saw April, market numbers of see continue World we to the as In Rest demand in demand. to Now the post-COVID. particular on World, in demand Europe, a in supply nice Asian we similar in

windows, booking big is of change. no terms there In

So we I think to see normalized pre-pandemic. that compared

windows, booking region vastly by days, slightly normal So from for average again between and And I XX not us but booking all Yes. different. what see, true pretty are being XX with we for that regions. an is different think window

call really nothing there's to So out.

Europe, see tells XX we that mean to just you in booking days I the that XX window demand. to summer started

bit about trends. talk it's to So, early a

general, increasing in so-called is Tier what demand. that we In X have seen destinations are

city that in by in to the looking the the seen trends share we mixes very international currencies. which at like even have these that increase European -- countries US most I different not in urban strong we driven saw other trips, also might of markets, it's the travel, international, travelers certain now and But the dollar, going recovered US was largely, pre-pandemic. largely by up, that relative see what be also We think than to stronger European are domestic euro we and

James Lee

Thanks, Great. Matthias

Matthias Tillmann

James you, Thank

Operator

question Thank of ahead. Citi. go you. Josey goes Ron Ron, please The to next

is line Your open.

Ron Josey

to direct just think hotel I a talked specifically. for ask Great. initiatives clarification Asia questions. bookings about then taking Thanks more on growth the little Matthias on quarter, about we Axel, that XXXX just last want I progress and like

recovery I of in reopening said, think strong we the China. Japan and

that Pac we do you. about to talk how that around other you forward, Thank going think the you about? should there, think progresses trends or Asia when do us dynamics Just any know

Axel Hefer

Sure.

product invest mean, started Matthias into to so. growth do to on we and obviously On initiatives. expect are said, mean brand we marketing initiatives, they to I marketing as our marketing and So continue I

side, some for running the to the on point is coverage in parallel making launch prepare in product are to time progress or and On features later differentiate tests testing the product the when coverage we're parallel increase really our sufficient good then year, the in that in in further.

we are to the So, start in the year. see with a happy some you perspective, later from user changes progress, but will

take still it So will some time.

Matthias Tillmann

or XXXX. to we financial that. said as the Yes. have will add we a other to or just one for before, quickly this significant notable I financial don't that way think mean, And impact

So we onboarding side, But I all revenue be hotels, nothing this the but included outlook do numbers shared. in incur the point. that's some and costs of in on should independent at you there's margin aware

obviously, we it And year has then Singapore, last will I like countries we saw the And recovery on second size But Rest mean question, a your it's given country weight to -- this bigger in a equally, already segment start have nice World. it's for share Kong, of smaller the Hong continue. obviously, bigger predict in that country. with the recovery nice hard very of But a Week think seen of our Golden and in I Japan, Malaysia. how

in I now so I nice the a starting last started have response. far have already really. to up And we across investments it's region and So think year compared ramp to seen,

us. is to think and the trend there So opportunity I a be it for continues growth

particular the is period, a that marketing pandemic, haven't that We there these during absence active response. the over come positive once in markets. during And years back that it's some with to brand that start just in of see nice very been you of for two

And for two recovering. continue And continue we into to that will of relative region we that. will if World to yes, to us expect it's grow do for invest that, segment the Rest segments. other opportunity I we us an that to think see the we And

Ron Josey

you. Thank Great.

Operator

Instructions] Kevin please [Operator of Thank next ahead. TD question our And goes Kopelman Kevin, go Cowen. to you

line Your open. is

Kevin Kopelman

advertising Great. launched Thanks campaigns for color us brand brand in you're the Thanks. so far give the and you reaction that's consumer how more you've Can that. on past? compared from seeing, investment maybe to the in

Matthias Tillmann

obviously before. what focusing with everybody's we but speak. I And a Thanks, to core said, on Kevin. the the price high-inflation, everybody and Sure. the on we mean, saving it's is about in of top Yeah. we I comparison is change? environment messaging in mean, mind current did message mind talked money change so

alert. message e-mail to focus cetera. product tried And And it's We features. also why -- that's brand bit that not that but sharpen our the more We et it's the in with little launched a only on combination marketing message, we even. price

I it's think really showing So approach. And effects. that's holistic

see And campaign also Where ramp on in can we we direct It's current TV -- -- from -- a it's so response response when we the our -- in the start as we now I campaigns. the our see there, compare and are There platform. in we to In see we that? the we visible brand visible. in particular mean, in May, obviously, our are up. traffic,

exciting time now. So is only the starting

the I compare what last the confident should we have that and makes And what scale we greater is is, guidance than and Spend do Ad is is EBITDA opportunity to ramp us up see But we if before, us. why and up ROAS, year the are it's for year we that that that that because think And And we it response what before. seen an our on investment. is that planning.

Kevin Kopelman

June we us basis? think quarter, look one, about like compared the May a remind as comps And other on just how and one April Great. of can the to on, you year-over-year rest

Matthias Tillmann

Yeah.

and the about it slightly will way April us So then March I the May and comps at be in is, first then, think you for easier June. in particular if half in think look and toughest to were

Kopelman

Matthias. Great. Thank you,

Matthias Tillmann

Thank you, Kevin.

Operator

you. Thank

no hand for comments. have back Axel, We I'll now any further to closing questions.

Axel Hefer

that a in a Thanks metasearch good will to to next key as for Many succeed. its be and we value earnings quarters the time And clear thanks. proposition be, will The participate call. today's the for communication decisive years industry, day. believe and taking have

Operator

so today's now This joining. concludes for you. call. you much Thank Thank

now disconnect You lines. may your

trivago (TRVG) 3 May 232023 Q1 Earnings call transcript