Q3 2019 Earnings Call
As a reminder, today's conference is being recorded.
This time I like to turn the conference call over to trip advisor Vice President Investor Relations.
A little lines. Please go ahead.
Thanks, Victor Good morning, everyone and welcome to our call joining me today, our CEO , Steve Kaufer CFO Ernst Teunissen President of hotel, it's kinda, Sony and President of core experienced Wendy Nelson.
Last night after market close we distributed in filed our third quarter 2019 earnings release, we made available our prepared remarks on our Investor Relations website located at IR Dot trip advisor dotcom in the release you will find reconciliations of non-GAAP financial measures to most comparable GAAP financial measures discussed on this call.
You'll also find supplemental financial information, which includes certain non-GAAP financial measures discussed on this call as well other performance metrics.
Before we begin I'd like to remind you that this call may contain estimates and other forward looking statements represent management's views as of today November 7th 2019.
Trip advisor disclaims any obligation to update these statements reflect future events or circumstances. Please refer to our earnings release as was our filings with the FCC for information concerning factors that could cause actual results to differ materially from those forward looking statements.
Now here, Steve who share a few thoughts before we open the call it the questions.
Thank you will and good morning, everyone.
Q3 was more difficult than we had anticipated and this is somewhat dampened our outlook for the remainder of the year.
However, we are taking action.
First we are focused on driving non auction revenue growth and continue to make excellent early progress on a number of broken initiatives.
Second we are evaluating our cost structure, and we'll prudently reducing reallocate expenses.
Parts of our business to preserve strong profitability, while investing in strategic growth areas.
And third we are returning more capital to shareholders, including the declaring a special dividend of $3.50 per share and increasing our existing share repurchase authorization to 250 million.
In some we're allocating our resources in our capital prudently and at the flexibility both know when in the future to simultaneously investing growth areas bundled opportunistic M&A and return cash to shareholders to drive long term shareholder value.
We're also very excited to have entered into a strategic partnership with quick Dot Com group, an important step to further strengthen our position as a global crop of leader.
That was many of you know during the past 12 months, we focused on building the leadership team, we need in order to execute against attractive long term opportunity and welcome to talented and experienced leaders for for this next stage in our company's growth.
I'm very pleased to have chronic dysphonia president of hotels, and Lindsay Nelson President of core experience join US today during Q1 day to discuss these initiatives aimed at deepening customer engagement on our platform and monetizing lasers and.
Well now open up the coal.
Thank you as reminder, just a question you wanted to press star one on your telephone.
Great question, Chris Okay.
We signed by only compared to Q and a roster.
Our first question will come from China, Deepak Mathivanan from Barclays You may begin.
Hi, guys. Thanks for taking the questions.
He has done that it's a highly fluid dynamics.
For Q commentary and then also in 2020 is there a scenario that could cause you to be was weak you are the benefit of lapping the marketing optimization.
Well enough to offset any traffic headwinds how should we think about this in 2020.
Hey, Jim be business and then second question can you give a little bit more color about what steps you're taking discount.
Advertising units.
No that puts the tynwald largely related to hiding I'd say as James or what else is required before we see that business reach meaningful scale, you know as a big.
Become part of revenues. Thank you.
I'd back this is our Ernst we.
Having said in her prepared remarks, <unk> said that we expect Q4 trends to be a improved versus Q3.
He is the lapping up the optimizations that you mentioned a there also the non auction revenue items in our HMP segment.
That we will talk about a little bit more where we expect as a meaningful contribution now from these new initiatives.
We have started in Q4, so even with the trends in the core auction as they are a we believe we can improve the revenue performance versus Q3 previous quarter. We thought we would actually get to a growth year over year in H.M.P., we've set this quarter and given the more and more recent trends.
We don't believe that is a is likely.
But we do believe I still believe that it's going to to narrow the the negative growth is going to narrowing in the fourth quarter what about 2020.
The we expect continued improvement in into 2020 .
We are going to.
I continue to see benefits from these non auction revenue items.
We are also next year.
No longer a disadvantage from a year over year trends and and people paid marketing.
We're now at this point prudently not putting up a fine point on when we expect each when people to go back to growth, but somewhere in 2020 is is our expectation.
Oh not auction.
Oh actually a past that onto out to both kind of guy and a and lives you talk more about but as I said not auction is an area, where we expect not only in Q4 to see initial positive impact, but as we look ahead to the future that is an area, where we can drive double digit growth in a in those.
Revenue lines and so we're excited to see that happened. It. Maybe then you can kick off what we're doing all the.
My Mediasite, Yeah, Deepak I think sort of question. So we've been working on growing the media, but that's for the last six months or so a addressing some infrastructure and capabilities.
Over the past few months, a we actually have you know RT said on a fairly large sales organization and we're on the other side of a real work that we executed at the beginning of this quarter. So we expect to get some additional leverage out of that current sales scheme of course next year as we look to expand our customer base, we'll look to bring on.
Additional sales folks, but were actually pretty pleased when somebody investments that we've already made I. Just this quarter alone we've rolled out I hadn't new products to the market. We're already seeing some really great traction and some promising pipeline there were also.
Our focus on some other leading indicators like growing inventory, we have a tremendous amount of capacity on the platform that we're looking to unlock and regarding brown monetizable inventory.
By double digits. We're also focused on expanding customer base and I think one of the things. We're really proud of it we have 100, an 89, new advertisers this quarter, along which I think demonstrates that those are audience, our platform and our marketing solutions are attractive to not only marketers with.
Then the travel category, but also marketers and finance, a food and beverage auto and then finally, where we're focused on really making sure that we're doing a good job at expressing our value proposition to partners and we're starting to see the result of that work by growing our average deal size.
I said certainly more work to be done, but we have a large team today, we have a lot of capabilities today and our outlook on the teacher remains unchanged.
Right and I'll take the B to B side, you, obviously have a very healthy business today, the Arizona mentioned, our beauty business is going by double digits on Friday, driven mostly by sponsored placements, which is on track to achieve double in size. The CR. That's a very solid foundation for us to be building from and I mean very bullish on this.
Ladies and the opportunity to the segment for them.
We look into the future of you've outlined streaky priorities for this part of the business Im actually making great strides against each of those priorities number one we want to execute with a very bachner fosland.
That sounds very simple, it's actually a pretty big cultural shift within the organization for us.
Understood and then he touched on that all year as Bob you've done a pretty big sales reorganization.
With one objective of creating single point of accountability at the bachner level across our portfolio of products. We believe this will give us visibility in that better visibility into partner needs and priorities and really allow us to bring products to market that fit that need.
Number two we want to focus on innovation into beat him back means rapid deployment more upgrades more features as far as I existing products go under the same time also maintaining an ongoing pipeline of new products and without him or would that have an objective in goal in mind, we aim to bring to new products to market in 2020.
We also want to create new sources of value for our partners, which means looking more holistically and taking a wider none and a broader lens to how we saw that partners and the value that we create and extending that volume to be on direct bookings. So again better be Lindsey mentioned on the media side more work to go but you've got a lot of the foundational pieces in place already agreed business to both.
From a need I mean really excited about continuing to leverage our assets to build and grow in the segment.
That's very helpful. Thank you.
Okay.
Our next next question will come from the line of Lloyd Walmsley from Deutsche Bank, you may begin.
Thanks to fight Ken first maybe for Steve earned.
On the on the E. N D segment, just curious if you can explain a bit more about why you'd be reducing investment. It was what seems like a pretty strategic growth area for the company one where you guys have an advantage now do you do you worry about under investing there if you're looking to cut back and then secondly, Lindsey and.
Okay, great to have you on the call a very helpful background already you guys have shared with us, but maybe you can talk about some of the things you're most excited about in terms of the expanded AD units on the site.
And then.
How meaningful do you guys think this can get too in the revenue mix some of the new stuff you got you all are working on thanks.
Super Thanks, Lloyd this is Steve Oh pick the the in the.
In the work.
We look back at the level of investment that we've applied to both experiences and dining so over the past a four or five years and say I, it's been incredibly beneficial to the company we've moved.
Into these huge categories that the Tam is wonderful we've talked a lot about that.
And Weve invested quite heavily I and we absolutely believe it was the right thing to do.
We continue to invest in both of these areas and so what we're really talking about is shifting some of that investment from Oh from the building of supply and you guys can all all see the fantastic results of that to leveraging the demand that we already have speaking specific.
We have experiences of course.
Hi trip advisor has.
Good to millions of travelers each and every month planning this consider trip and finding that breed thing to do is part of that equation and so with the supply let's see with the the from lead with excellent conductivity with a rebuild tech stack in many different parts, we can say excellent job a team.
Internally and now we can work on the demand side converting the demand that's already on trip that's already on fights for its already flowing through our third parties into finding the right product for the right individual that's a personalized recommendation, it's a frictionless consumer path, it's the right reminders in trip and pre planning.
All to help so I when we look Oh cost wise, we see the opportunity to help move folks from a essentially the backend the supply piece towards the conversion and to really help address the customer needs.
All right that's not unusual in terms of when one build up a marketplace you have to have enough supply in order to a in order to make the match now that we feel we do have enough supply in almost all parts of the world. It's our opportunity to to make that man match off of the traffic that I.
Let me remind people, we already have on or points of sale for us. Its don't really question of figuring out how to go find the traffic we have the hundreds of millions of visitors monthly already looking for something to do on are considered trip.
And I would add from the competitive lens.
Competitors are investing as well, but we were early at this at this game and we've invested way ahead of the competition. So far as Steve is saying we have a we have the largest supply base and what we feel we have invested sufficiently and we'll continue to invest sufficiently.
But we can we can tailor some of that expense if we can actually reduce in some areas, where we have maybe overbuilt, a little and it can be directed towards that towards other growth initiatives.
And then.
To point out versus our competition, we have some some assets that some of our competitors may not have we have the the vast trip advisor audience not only on our things to do pages and restaurant pages, but.
But also the ability to to cross sell from an entire travel experience perspective, and so we think we have some really important demand assets and it's not just the dollar number as well.
[noise].
So maybe for the expanded AD units and those opportunities all for over to Lindsay.
So there's a lot of things that I'm excited about around our media business, but I'll try and narrow and around three areas I think one of the things that Super interesting about my job as I, both oversee our marketing budget and I have folks inside of that organization thinking about customer segmentation thinking about creativity thinking about ROE I know same.
People sit in the same organization as our sales organization is trying to build solutions for market ours and my litmus test when joining the company is what I invest trip advisor marketing dollars on Tripadvisor and I can say the answer is now yes, and the things that I got most excited about are are we enabling premium programmatic.
And that's because marketers want to transact programmatically, because it gives them increased visibility into all of their data and customer segmentation and we should be able to enable a that kind of transactional buying without have said sacrifice a creative excellence and that's an area that we're putting a lot of attention.
The second is leveraging our first party data we have a huge push on the consumer experience side around personalization and loyalty the more we understand the traveler that bad or we can serve them and we can also take advantage of that data by turning those travelers into customer segments that are incredibly important to ARPU.
Partners, but also incredibly proprietary to trip advisor I think we have one of the most robust and important first party data, that's where we have an understanding or not only who you are where he led what's your affluence what are your preference and how big is your family size what are your travel.
Patterns do tend to fly do tend to drive and those are all signals that our marketers want access to until we're doing some at the technical left and infrastructure work can be able to enable that kind of segmentation, which I think it's really great.
And then third is what I think it's also pretty unusual for us as how do we cannot through the ultimate challenge for most marketers right now is thinking about the relationship between brand building and performance marketing and we're also thinking about that on the marketing side and how do you. It's those strategies together and understand how both of those budgets can actually.
They leverage one another and so while we have historically worked with a lot of our travel partners and the performance marketing space. We're really excited to work with him on the brand building friend, but also can actually those two streams together so that they could have a clear understanding of not of both the performance in the outcome.
But also how those channels are actually quite complementary.
That's really helpful. Thank you all.
Thank you and our next question comes the line of not Vetscan from Suntrust. You May you may begin.
Yeah. Thanks, a lot I have two questions just maybe on the on the hotel business, maybe Oh, Steve maybe can you.
Talk a little bit about the incrementality of the headwinds Oh, no and just seems like Thanks Man Garden Little watch what was it related to the tender that go what it might have made to the offering.
Our or was it just takes no there's nothing to something that might have happened and in the quarter before that so just give us some sense of that and maybe if you can go into do delivered what exactly the kind of Tendas go but isn't I can never be helpful.
Sure. Thanks.
Hi, So yes, a unfortunately, we did see some incremental FCO headwinds over the course of the quarter I know, it's always hard know exactly what we'll do goes doing we think of it is how far down. The page are we is our organic results I think you're seeing this across across the.
The industry is googles has got more aggressive I we've been.
Predicting this of course for for the past many years, we talked about on or last call. There's oh.
We know that this FCO piece is an ongoing trend and we're not predicting that it's going to turn around having said that we're doing a better and better job of.
Making or helping our travelers find the right hotel when they're in hotel shopping mode, and then our focus or around the whole trip advisor brand is enabling folks and offering many more reasons why they want to come back to trip advisor to plan. The consider trip and then that hotel shopping part.
Of that entire trip flows out the bottom as a as added benefit to trip advisor as we with the brand positioning as we with our CRM efforts as we with our loyalty programs get better and better App that we have the opportunity to to return the auction itself to growth.
Over the shorter term, we've talk more and more about these non auction revenue sources, including media, including hotel B to B restaurants experiences.
The sets of things that are already growing for us and that we feel all have a clear double digit growth ahead to make up for anything that comes our way in a in Google headwinds.
That's helpful. So last night, we also heard from Expedia talking about similar issues, Oh and that talked about spending more on paid advertising is that kind of a secondary effect, Oh, yes, which are not one of them.
Large advertisers on your platform might also be spending more oh.
Oh, what time or do you see anybody any sort of secondary benefits from this.
The goal within this.
So those are pretty it's a great question, there's a pretty hard for us to measure we've seen a pretty stable I environment from our key partners in the hotel auction over this year in and.
And of course, they have many places many choices in which to us to spend the performance dollars as lens in conoco would add up by making our offering that much more valuable by qualifying the traffic on our site before we send to downstream to know today by helping Oh piece.
Get their brand message across on our platform Theres still a we feel a wonderful opportunity to help our clients and lots of ways not just with the individual clicks on our platform today.
Oh, one last question if I mean this isn't so congrats on the on though on a few trip.
Partnership and on getting them.
Oh potentially.
Time as.
As I must tell and trip advisor I, just wonder just sort of get more.
Oh contact center on the being.
Well how quickly did it come around Oh, no just tend to go lives to the dividend payout Oh, why or why did you decide on why did you chose a dividend, Russia, though just doing a share buyback.
Sure I'll take the first part on the on the deal with trip Dot Com group I know, there's certainly been been a partner for hours for many many years, we've operated trip advisor.
China for for quite some time and they've been a fantastic partner for US there we feel like we've done a good job in China, but when we look at the size of the especially the outbound travel audience. We're outbound is where our content excels.
Hey, we thought partnering up with a with Ctrip Dot Com group in this manner offered a much better much more global much more exciting opportunity for all parties and certainly the combination of or strengthen outbound content global content their strength in so many things.
Including the eyeballs of the domestic Chinese travelers made for a just a fantastic strategic partnership so we do have.
Lots of excitement around the JV, we welcome them, a pending regulatory approval on to our board.
And you know.
If you like Theres, there's many many opportunities ahead.
Got my bad on the dividend and the buyback.
We are obviously very cash generative and we have a significant cash balance we had last quarter over $900 million of cash and cash equivalents on our balance sheet.
Have no long term debt and have been generating.
Very attractive profit levels and good flow through to repeat the free cash flow.
We have from time to time used.
Our proceeds for M&A and we continue to see an opportunity for M&A in sort of targeted selected areas.
But even taking that into account recent review, we we think perhaps we have significant.
Cash on our balance sheet.
That we could return to our shareholders and we thought this quarter was a good opportunity to start returning some some cash to shareholders.
We thought dividend was at an attractive way of doing that at scale.
In a relatively short period of time.
We're also seeing that the our board approved a further capacity for buyback Reno back up to $250 million of buyback capacity and so we have that in place as well and as we look forward. Yes, we will continue to have room for.
For M&A, but we think dividends and buybacks are are attractive opportunities trust returned cash to shareholders as well.
That's helpful. Thank you Steve Thank you.
Thank you and our next question will come from line of Tom White from D.A. Davidson you may begin.
Hi, Good morning, Thanks for taking my question thinking in the lender you talked about membership growth and how it's accelerated I was hoping you could just elaborate a bit on your.
Your initiatives, there, how you're driving that growth and maybe if possible give us a sensitive.
You know how that impacts to revenue model.
Be it.
You know better pricing because of more data that's sort of thing and then just secondarily or a one of your peers in the space last night.
I talked about.
Sort of HDR softness.
Sort of broadly.
Curious if you see in any evidence is that impacting your business. Thanks.
Sure. So thanks, Tom This is Steve opaque.
The membership growth piece.
Hey.
When you.
Well it up and look at our overall strategy and that we spoke about this before it does centered around a inviting more people to join trip advisor become loyal plan that consider trip not just the hotel not just the traction not just the restaurant, but really the.
The entire package I think someone as a member and then a loyal number is a fantastic wait to be able to reach out communicate with them and help them throughout the different planning phases of the journey frankly, it's a little less interesting if it's a single one night stay somewhere, but if you're planning that week long trip.
Somewhere there really are quite a few different aspects of the trip that that we can help with becoming a member telling us something about yourself.
Type the trip when you're going obviously, where you're going to sorts of things that we might learn about you Oh, we believe helps mens that that loyalty. The trip advisor that reason to come back specifically to trip advisor because.
We know you and hopefully we know you better than than anyone else.
Hi.
The the the amount of traffic that we have coming to our sites every single day affords us the opportunity. Unlike many other sites out there to offer reasons to join today and build upon the membership and the benefits of membership overtime.
I'll turn it to lens if she wants to comment on the revenue opportunities on that membership fees. Yeah. I think you have to think about membership holistically and it starts becoming a virtuous cycle. We said on a tremendous amount of members today Mailable numbers, but we've we've had a CRM strategy and tech stack that isn't.
Our needs and doesn't unable to enable us to drive personalized communication and what we know is that the more personalized we got the better the results that more revenue, we drive and that includes not only an email communication, but also the on site experience and so I don't think you can think about membership by just looking at one piece right. There's a registration compounded.
How do we onboard more members.
When we onboard you as a member what do we know about you and how do we get more sophisticated at getting members to share information with US that we can then turn around and deliver a better on site experience and more relevant communication and then finally over time, how do we create enough of a value exchange that's going to drive the directed habitual relation.
Assets that we aspire to and that's a platform strategy, which includes some of the work that we're getting around the native app. So how do we close the gap between trip advisor and our users and that's first and foremost starts and having a unique enough and valuable enough experience or that you can't get anywhere else.
And on your question about 80, our softest Tom there's some I've commented on.
Yeah, we run on the hotel side, we run a an auction and obviously what impacts our partners will impact Austin, especially what impacts our two biggest partners we've called out at various points some of the macro trends that we've seen either.
Regionally, what's going on different regions and softness in certain regions.
And Hbr is another area, that's being talked about so that makes an impact on us obviously, we're calling out the Google.
Impact in on this call because it's the most impactful one but the general.
Macro environment travel environment and currency are also factors at play into our results.
Okay. Thank you very much.
Thank you and our next question will come from the line a Mike Olson from Piper Jaffray you may begin.
Hey, good morning, I've two questions when looking at the potential for cost structure changes that you mentioned.
Maybe could you just provide any early thoughts on what kinds of cost cutting might be considered and maybe how many changes on that front could be done without potentially impacting topline growth.
And then second related to experience as you mentioned, having a strong set of supply and now focusing more on conversion.
That kind of imply that competitively or just not really seeing anyone else out there that has anywhere close to your supply in that category or I guess, maybe you can just tell us what are you seeing competitively there. Thanks.
Mike This is Ernst.
On the cost saving and some detail there as we outlined in our prepared remarks, we see three areas, where we can reduce cost from our from our run rate and one is on the side and.
Steve alluded that to maybe reorienting from supply more to two demand growth.
The second area is is generally a targeted.
Reductions of cost and overheads that we see can see across the business and we see opportunity for across the business and third.
Is to look at our brand budget were revamping our brand strategy for next year, and we think there are opportunities for us to do that more cost efficiently going into next year. So if you look at that sort of together.
This is so early days to what we are currently sort of anticipating is.
Take a meaningful cost 60 $80 million out of our out of our run rate and.
And use that to funding some of the growth areas and we don't think we need all of that and to fund some of the growth areas, which are.
In the area of our media business in the area of building membership in the area of our restaurants solution business and in the area of our hotel B to B.
And.
We think that is a a prudent measure to take at this point we're looking at.
The headwind, which is not just a revenue headwind, but obviously a profit headwind that we see in our auction right now.
And we don't know if that.
Extrapolates into next year and if that is how much of a headwind that is next year, but we prudently just assume it is and therefore, we're taking measures to protect our EBITDA because that's very important to us we want to continue to drive strong EBITDA and and these cost measures are.
Our way to achieve that for us and obviously, what we're doing as we're looking across our cost base and say how can we do this with minimal impact to revenue how can we take out areas of cost that do not directly drive revenue and where we think the line to even long term revenue is a little bit tenuous and so that's.
That's our focus point there and.
We anticipate therefore, this largely will allow us to.
To fund other further fund other failures.
This is Steve I'll take the experiences question so I.
I do want to be clear I think we've done a fantastic job exceeding many of our own expectations in terms of how quickly we've been able to grow supply over the past couple of years.
And we are not by any stretch of the imagination stopping the onboarding of additional supply in.
In all of our markets.
The opportunity however is to slow down a bit on the supply because we feel we already have a ton agreed stuff to offer to our consumers and shift more towards.
The conversion shift more towards discoveries shift more towards making sure we're presenting the right inventory at the right time.
In terms of competition there certainly there is competition on the demand side.
And there is competition in the sort of OTI a four four attractions that's out there in the each have different angles of weighted where they might be particularly strong in supply and.
Hey, we respect those competitors immensely.
We are the ones that have such an incredible amount of demand already people travelers already planning a leisure trip looking for something to do and we have we believe a plenty big enough supply footprint to satisfy most of that demand we need to become better at matching that demand you hear us talk about membership.
Loyalty.
The site experience how do you discover this.
And and reiterate of course, we will continue to be having supply to the equation were not stopping what is just no longer or one of our primary focal points for the coming here.
Thank you.
Thank you and our next question will come from the line Mark Mahaney.
RBC capital markets you may begin.
Great. Thank you. This is what that's remark few quick ones. Please for restaurants, just similar to experiences <unk> bookable restaurants, and diners. Both good have pretty healthy clip and what are you. Most focused on in terms of I you focused on growing more restaurants, improving product or diners in putting conversion.
Where do you see most opportunity there and then second one.
He is on M&A, you called it out you're looking at it what categories.
Are you targeting and then you're sort of looking at and then finally in display.
Display revenue expected to double and next three to five year, Hey, you're reiterating that I just following up on what you said last quarter. Thank you.
[noise]. Thanks, whether this is Steve I'll take the restaurant question, we certainly expect to continue to grow supply growth seated diners in all of our markets.
It is a.
Area, where again, we continue to grow across all dimensions key focus for us.
Building the habit I most to the transaction most of the ceded diner growth comes from our mobile offerings, that's to be expected and the more habit. We can build amongst more people the better off to build a habit you have to have.
Terrific supplied footprint, that's what we have so we'll continue to expand that but if you ask me, which is kind of most important habit repeat visits loyal users and you get that by driving supply books sports.
And in terms of M&A categories.
We think across our non auction revenue growth areas.
We have the ability to grow without M&A and we have a lot capabilities that we have four can build but complimentary M&A. These areas may make sense from time to time and so that's those are the areas that we that we look at.
In terms of your question on display yet we said, we expect the business to double in the next three to five years and we continue to do so I think what Lindsay was describing before as the team is fully focused on that is rolling out new products and sees a lot of opportunity and.
And we continue to think that is that is well within our reach.
Okay. Thank you Steve Thanks.
Thank you.
Our next question will come from line, Eric Sheridan from Yes, you may begin.
Maybe following up the last from just sort of asking it from a little bit different question.
Steve you take this but how do you think sort of broadly about the competition, you're seeing Google at the top the funnel and you have the competition for direct traffic at the bottom of the.
Whether the broad or sort of better travel advertising layer of the industry.
A pretty extensive consolidation just sort of have much more scale.
More interesting dynamics and the auction and the ability to sort of reclaim some of the dynamic that existed in the industry sort of three five to seven years ago, just kind of curious broadly like your big picture view on that consolidation between Google at the top and sort of the otcs at the bottom as a potential way to create shareholder value.
A lot of changes to the property make it a little more social little more interactive over the last 12 months I don't think it was talked about earlier in the call, but such give us on what that's doing for engagement where session lanes were sort of a sort of broad engagement trends you're seeing what's your users as they come to the site that might lead to better conversion overtime.
Thanks, so much.
Sure Eric Thanks, Great question, certainly something we think about all the time I.
We are we're blessed by having such an incredible footprint of traffic a global brand and a trusted brands so when folks.
All over the world are looking for that for that considered trip for that special vacation, they're turning to trip advisor. They may find this through a variety of different channels, but it really is pretty closer that they're looking for.
When we think of the specifics of Hey, how do you compete with a hotel meadow auction against all of the sets of the competitors, including Google That's a challenge there's a lot googles up bundle from us the.
Okay to use or some of our biggest clients also have the engines of of their own.
Our answer is to be not the worlds not for people to think of us as a metasearch engine for hotels with I think was as a side to plan and amazing vacation and that's not the space that others occupied you can't go too.
Google or no ta or any of our incredibly strong competitors and look for.
Recommendations from people like you about where to go and how to maximize your your precious vacation time trip advisor with the size of our footprint with the content that we have the recommendations that we make today with our different sort orders and going forward with what will be able to do going down the road, we think room.
Means the category of one in the ecosystem.
So in summary.
We already have the scale. So it's not a scale issue competing in the individual category case, that's challenging because you do have these players than you do have Google top of funnel from us, but as a considered trip as planning the whole vacation. We believe we are the ones best suited to address that need.
When it comes to how we do that we've done a number of things are review count continues to grow.
Our we have a number social features on site for the folks that that are looking for that type of inspiration and then I pull us back to our growth in membership because when.
We query our audience when we do our user feedback surveyed everyone continues to tell as we love.
The recommendations, especially when they are people like me, helping take me, where I want to go have an amazing time and the social connection combines extremely nicely with the trust that people already have in the trip advisor brand and the fact that it's not just.
A magic algorithm is real people content, helping you, helping you do that trip, that's where you'll see us continue to focus in the coming year and multiple years, because we believe it is truly a differentiator between what tripadvisor has and the set of competitors that you name and.
Whatever new competitors are rising next decade.
Thank you so much.
Thank you.
And our next question, what's on the line of Dallas and from JP Morgan you may begin.
Good morning to stay on for Doug. Thanks for taking our question first on last quarter. You wrote about re imagining your trip advisor out this quarter you can you maybe.
Timing around the release appreciate to 30 on let me come through the change I was curious to hear what change we should be expecting to see what youre trying to looking to improve from your current that.
And then secondly on buyback it's good to see additional authorization, but just curious to hear why you didn't buy back shares year to date and how we should think about the cadence the buyback going forward.
Right and you will take the first yes, I can take the up so as we shared we factored released a new native apps sometime in the middle of next year, there's a number of things that we have that new.
Our strategy will deliver on some really practical ones like a speed and performance how do we make the after faster and more light weight. So that it can address the on the go use case, we plan to focus a lot on thus enhancing and modernizing the user experience how do we make it so easy.
Thank you would have to plant here in higher trap, whether you're moving from the App and bought back to desktop or moving back into email I said, we have a focus on user experience and also planning tools. How do we help you save the things that you're excited to go deal and deliver back to you when you reopen the app.
Those ideas.
We also are really optimistic about the commercial opportunity historically, we haven't had much display advertising or we actually had noticed by advertising and the native app until recently so were excited to build the both the consumer strategy and the commercial strategy together and that we think theres a lot of opportunity to leverage the unique data.
You can only get level to buy.
In terms of a buyback a year to date.
We have a continuous dialogue here internally and with our with our board about capital allocation and we look at what M&A pipeline do we see ahead of us or maybe even what transactions are ongoing.
Versus.
Returning cash to shareholders and.
Year to date Didnt conclude in a buyback would as as as we outlined clearly.
This quarter, we're leaning in more on shareholder returns with a with the dividends and also with the expansion of the buyback.
Capacity.
Okay. Thank you Paul.
Thank you and then next question on top line of Kevin Kopelman from Cowen <unk> co.
We began.
Oh, Thanks, a lot or just had a couple follow on.
Yeah dynamics that you mentioned that.
In the industry this quarter so.
First within the context.
Okay.
Having been pressured for a number years can you just give us sense.
If you've seen any stabilization in recent weeks following the kind of mid quarter deterioration in FCO or are you seeing that kind of current wave.
Deterioration.
Continuing to dissolve or get worse.
To date.
Thanks.
Well. This is this is Steve by its always kind of hard to tell these things don't tend to drop off a cliff on one particular day.
And so I couldn't comment on anything over the past couple of weeks.
Weve forecasted in general, where we think FCO is going to go going going forward.
And we don't see any reason to think that the trends will be different in terms of Google continuing to take more and more space in the search results, we believe our strategy around.
Diversifying the HMP revenue stream off of the auction onto other pieces combined with our other segments combined with the holistic, bringing the trip advisor story around the considered trip for which the hotel auction and everything else will benefit is our is our way forward in light of these ongoing.
Yes headwinds.
Thanks, Steve that's helpful. And then just one more follow up can you give us an update on.
On your as you know exposure as a percentage of overall chip revenue today. Thanks.
Yeah, we're not we're not getting to getting a precise on the the percentage of SGL, but it's a it's a significant minority of our of our.
Auction revenue.
Thanks.
Thank you and our next question will come from Ryan of James Lee from Mizuho Securities May begin.
Yeah. Thanks for taking my questions. Steve follow question on JV, which dotcom here and maybe help us understand a little bit.
Besides CIT.
Visor, China any other assets you putting to JV and also what does see could bring to the table into the JV and what do you foresee as the key synergy between the two companies.
And what are you hoping to achieve on the longer term and on the same topic a question for.
Earns how should we think about the.
Assumption on valuation for the JV specifically.
Fair to say you effectively selling 60% on a trip advisor, China, and which enable you to highlight asset value and also letting featured run the business more effectively thanks.
Thanks, James for the question, so I see trip to certainly contributing.
Not only the cash, but really their expertise and identifying what's going on in the in the China market, especially towards the outbound they have a ton of experience on the use of profiling side on the.
Understanding what's that customer segment ones as well as sort of best in class booking capabilities across the board I.
I think trip advisor to the flipside brings an intense in seen amount of relevant content for the traveler no matter, where they are going and so when you combine those two strengths into this trip advisor trying to opportunity we feel that the possibility for that JV into.
T two really become much more meaningful player in the try and travel ecosystem.
Emerges and that's something that I don't that trip advisor I don't think would have been able to do on our own.
See trip doesn't have historically the type of content play, especially for outbound that tripadvisors brings to the table. So the long term goal.
It's not confusing it's being able to take the assets that both parties bring to the table and create something really magical doing a fantastic job serving that outbound travelers.
In terms of valuation, it's a it's going to be a valuable company going forward is as Steve was describing there's cash going in there as assets going in our brand is going in content.
And.
The vast expertise that we haven't and took dot com group has.
Specifically around China, and so we think that is.
Accompany a joint venture set up for success in China, we've been in China ourselves for awhile.
And we bring a lot to bear in China, but we have have on our own.
Not been able to to be a significant player and this JV has has more of a chance to become that so we're very excited about our opportunity to do that together with.
We'll see drip.
Okay, Great and let me ask a follow up question on experiences here I think earns you talk about shifting investment to more on the demand side as opposed to supply something maybe Steve you said the same thing too and maybe give us more color on what investment you're making here are you increase.
Bookable supply so we moved to friction for consumer to book you know audio experience, they're looking for Oh are you changing the user interface on your various property to make them was seamless for the consumer perspective or are you investing promotion and marketing for customer acquisitions onto your web sites and help help us something.
That little bit thanks.
Sure I think we have the opportunity to do many of those things I'd say or focus would be.
Helping the travelers that are currently looking for things to do helping our travel on or that are on trip advisor and budgets were today, helping the travelers that are already planning is considered trip the matched with.
Right set of Bookable inventory that we probably already have with as I said, if we feel we are missing something key I mean, that's an ongoing process to go add that add that to the platform, but whereas we've.
Very happy with our triple Triple digit Bookable supply inventory growth that's not the core metric that's not one of the core metrics that we will be chasing.
In years to come as we feel like we have a lot now it's a question of matching it with the demand that we already have in a better more inspirational clearer more helpful way matched with the additional info we're learning about.
Our membership growth on crude the question.
Great. Thanks, so much.
Thank you.
And on last question on the continent line of Jed Kelly from Oppenheimer you may begin.
Great two if I may.
One on the C tripped agreement congratulations.
Does that allow you to work more closely with my trips now and then second just on the last point.
Sort of managing demand.
In terms of putting the best Bookable supply for activities is that kind of initiative, where you're so your internal supply forced works with the best providers is that how you sort of think about managing yet.
Steve So I I mean make my trip, it's been a claim for many years I couldn't really opine as to whether this particular JV helps that I know that run pretty independently, but again, we we already have an excellent relationship with them.
Make my trip.
With regard to.
Experiences.
We already generate a number.
Quite a large transaction volume for quite a few suppliers were important there ecosystem, we love having them.
As part of our platform I think what I was alluding to before.
Was.
More capturing the needs on the part of travelers that are currently on Tripadvisor and by the tour and making sure our suggestions for which of our Bookable supplies best suited for their needs is a very nice opportunity. We already have the traffic we already have the supplies. So its product. It's you why maybe it's.
Emotion other ways to to help make that match during the during would consider trip and then when we know someone's actually on the trip help them fine.
The amazing something to do when they're already there that they may not even been known about but we know who they are we know where they are and so we're able to send to push message or a highly contextual email. That's that's extremely helpful to that traveler.
Thank you.
Thank you I don't I like to turn call back over to our CEO , Steve Kaufer for any closing remarks.
Great well, thanks, everyone forward for joining the call.
In closing Q3 didn't meet our expectations, we're moving forward with urgency towards our future growth opportunities I look forward to updating everyone on our progress next quarter. Thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.