Key Takeaways From TripAdvisor’s Q1 Results

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Trefis
TRIP: Tripadvisor logo
TRIP
Tripadvisor

TripAdvisor‘s (NASDAQ: TRIP) earnings per share beat market expectations while revenues missed. In Q1, the company’s total revenues declined 1% year-over-year (y-o-y) to $376 million, largely due to weakness in hotels and auction businesses. The company also rearranged its revenue drivers this quarter onward. Further, the company’s adjusted EBITDA grew more than 10% during the same period, largely driven by the hotels’ EBITDA margin expansion. In addition, the company benefited from solid demand for its Restaurants and Experiences segment, which has continued to deliver operational and marketing efficiencies and solid improvement in profitability. In Q2, we expect the company to see y-o-y revenue growth, as the non-hotel business will likely drive its growth.

We have a price estimate for TripAdvisor of $57, which is around 5% ahead of the current market price. We have created an interactive dashboard on What Has Driven TripAdvisor’s Recent Results, which details our key forecasts and estimates for the company for fiscal 2019. In addition, you can see more of our Information Technology company data here.

Segments Breakdown

  • Here’s a quick look at TripAdvisor’s key revenue sources:
    • Hotels, Media & Platform Revenues: $254 million in Q1 2019 (68% of total revenues). This segment primarily consists of TripAdvisor-branded hotel metasearch auction-based revenue, transaction revenue from its hotel instant booking feature, subscription-based advertising, and media advertising placements revenue.
    • Experiences & Dining Revenues: $80 million in Q1 2019 (21% of total revenues). This segment, as the name suggests, is broken down into Experiences and Restaurants.
    • Other Revenues: Nearly $40 million in Q1 2019 (11% of total revenues). Rentals, Flights/Cruise, SmarterTravel, and TripAdvisor China are combined and disclosed as Other revenues – as none of these businesses meet the quantitative thresholds to qualify as a reportable segment, according to the company.
  • TripAdvisor continues to expect its consolidated adjusted EBITDA to grow double-digits in fiscal 2019.
  • The company also expects the hotel segment to see slight declines in fiscal 2019, due to a continued negative impact from marketing pullbacks and some additional currency headwinds in the fiscal first half. However, the segment’s profitability will likely remain strong on the back of its lower cost base and more restrained spending.
  • Experiences and Restaurants segment has been profitable but is still largely in growth mode as management focuses on adding to its portfolio of bookable products in hopes of capturing a dominant position in this high-growth market. The company expects this segment to grow at a similar pace as last year in fiscal 2019.
  • The company’s management also mentioned that it is investing in product development around experiences and dining as well as sales talent in the U.S., Europe, and the Asia Pacific.
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