Q4 2019 Earnings Call
[music].
Good day, ladies and gentlemen, thank you for standing by welcome to Trivago fourth quarter earnings Conference call 2019.
Next time, but disciplined in listen only mode. After this pick a presentation there will be the question and not the session to ask the question Jordan detention, you'll need to press star one on the top on keep us.
I must advise you the coal is being recorded today Wednesday, the 12 for Fabry Twentytwenty what needs to be joined on the call today by OXXO Hepa, two buckets heal and managing director and Mathias steel on Trivago <unk> CFO.
Following discussion, including responses to your question sort of next management's views as of today talk of Abu Twentytwenty only.
[noise] Trivago does not undertake any obligation to update or revise these inflammation as always some of the statements made on today's call. All forward looking typically preceded by words, such as we expect we believe we anticipate Cmos statements.
Please refer to the fourth quarter operating and financial review and the company's other filings with.
S E C for information about factors, which could cause to evolve with actual results to differ materially from these forward looking statements.
You will find reconciliation of non-GAAP measures to the most comparable GAAP measures discussed today into bogs operating and financial review, which is posted on the Companys all that site at <unk> Dot Trivago dot com, you're encouraged to periodically, but the two Bob with Investor relations side for simple importance content.
Finally, unless otherwise stated all comparisons on this call will be against results.
For the comparable comparable period of 20 team.
With that let me turn the call over to accelerate please go ahead.
[noise] well controlled Q4 earnings call as you might have noticed we've changed the format of all release and said another shareholder lets say yesterday.
During the key developments of the business under market.
Well, we are going straight to our Q and I.
Operator, we're ready to take the first question.
Operator can we take the first question question comes from line of MEDCOM. Please go ahead.
Yes, Thanks a lot.
Maybe a couple of questions so I'm willing to put their XXL.
Talked about.
Running our scale cast.
The first half.
Can you maybe give some color on what kind of test is might be what kind of dealers want the color.
And then I have some products.
Sure I know it.
So thanks, a lot from the question.
I mean, I hope you can understand that we cannot give more details here beyond what we have just closed already.
But I would say is that.
We're currently running Lonza Incrementality test in certain performance marketing channels.
And the animals, Matt is too high but to really understand but where we're spending efficiently and at the level that is right for us.
And sustainable in the long run, but at this point, we cannot give more details then what we have disclose already.
Got it and then.
Yes.
Your clarification, so I'm on the corner, whereas obviously it seems like taking equity.
Fluid, but maybe can you shed some color on like maybe the last two weeks, what kind of seen like volumes, maybe dropping off or whatever what is it that that you're seeing the most and then.
Maybe just.
As it regards.
Got it was at Asia.
Mark I told you most exposed to.
And on the guide maybe so on the obvious candidates you expect positive EBITDA should we expect EBITDA to grow year on year or.
Not necessarily the case.
Yes, so on your first question I.
I mean as you know generally speaking it is very hard for us to quantify what the exact impact of the accrual nobody was it.
We do see a drop in revenue specifically in Asian Pacific countries. So that's the reason that as most affected.
But again it is very hard fought for on so anyone also to forecast how this will develop and.
We look back what other data points out there and obviously losses, one but it can play out very differently and we have not been around as a company back then so at this point, it's too early to say, what the impact will be but as I said, we do see softer business.
In those markets and revenues are down, but how big the excellent pick this is a bit hotter.
On your second question on guidance. So, yes, we said that first half will be positive.
If you look at first half 2019, we we had an EBITDA off around 40 million.
So, saying it's positive means clearly that is down year over year, but as we also said, we oh ambition is to for the full year two.
Increase slightly I'll, Oh, EBITDA, so that's awful, but first half there'll be down year over year, but positive.
Great. Thank you.
Thanks next question please.
Thank you.
The next question comes for line of brand Fitzgerald. Please ask your question.
Thanks, guys.
You mentioned in leveraging some of the learnings from your brand campaigns in the Americas.
What do you see working there as it is it some of the recent Mr. Trivago creative anything else you can call out and with the shift and brand messaging towards this value prop.
Price comparison.
How has that been resonating through and what are you seeing in terms of impact traffic and conversion.
Thanks.
Yes, Thanks, Brian.
So in Americas, we we really started to focus more on all key value proposition early last year. So in Q2, that's when we tested.
Slightly more focused message and then we we rolled that out although our peak season in Q3 and that we have seen very positive results. So.
If you watch those comercia this to with was the Mr. trivago. So in the same concept.
I would say the key difference is that we're just more focusing and and trying to.
Basically a show a what our key value proposition so how we compare.
As as we've said before I'm getting the success, we we're planning to adopt those also for other reasons and we have actually started early this year. So seminar spots are running right now in Europe and rest of the world.
Oh, that's right at this point, it's a bit too early to tell them. If they are equally successful and but the plan is really to get the insights and data unknown and to be to be ready for the peak season in Q3.
Great and then I had one another one of just on on the AD mix.
In terms on the market dynamics in Ad spend.
Unrelated party revenue mix on and slide in the deck and by the way. Thank you for providing us beforehand.
[noise] did or did booking step on the gas that expedia pullback or to everyone pullback in Expedia pullback more I mean any.
Color you can give us on just how that as a bucket is trending.
Yes sure.
So a indeed the they're the mix has changed so expedia has reduced the overall relevance for our business and booking has gone up but we I mean as as in the past don't don't comment I cannot ready comment on individual appetizers and there.
Their behavior in the marketplace, but the overall results on our revenue mix is exactly what you're describing.
Great. Thanks, guys.
Thank you.
The next question comes for line of James Please ask your question.
Good thanks for taking my questions just want to update.
A follow up on the question regarding booking dot com and OTI spending and maybe in the context, where you talk about potentially double digit revenue decline you in the first half or 20, because last quarter. You guys mentioned that you reverse the landing page assessment and you also to some testing.
I think promising maybe help us to reconcile your statement on you versus you know some deposit development that you've seen a with all t. advertisers and also my second question regarding.
On a.
Statement that you made the shareholder letter we talk about significant changes.
I would like you'll approach with advertisers. They include Recalibration of marketing mix changes in market place and introducing alternative revenue stream. If can you elaborate those three elements. Please thanks.
Okay. Thank you for the question.
A question one and two hour related so just to clarify the comment in the latter. So we are conducting a very significant tests in the first half of the year add that are aiming to optimize and recalibrate our performance marketing spend and the expected impact of that on rest of the world.
Just have that optimization alone.
Maybe double digit so that's how how the two two questions I think our related so that is just the impact of the testing.
And in addition to to the underlying business performance.
The the results of the test, obviously, a very difficult to forecast, but the aim of these tests as true to calibrate the spends to an optimal level.
Right.
Yes, so you're coming to us to your third question alternative revenue streams. So.
So we are running various tests to.
To test whether other revenue streams than our traditional.
CPC based revenue are accretive to the overall business and as with any tests, it's difficult obviously to share to imagine thought because they are their test as they have stood uncertainty one that.
I can share I'm is that one of the revenue streams that we're looking into is sponsored listings. So we are as of today as far as I know.
One of the very very few remaining players in the industry does does not offer the opportunity to two really sponsor at listing and significantly boosted lifting.
And and there is significant demand for that product coming from our advertisers. It's a very frequently a request.
And we've we started to to build infrastructure to terrific cash. This concept couple of months ago, and our testing at as of today as we speak.
So that that is a as a potentially promising alternative revenue stream, but they're also others that we look into but even with a sponsored less thing just to be very clear. If we are not I'm satisfied with the test results were not proceed. So we continue to stay very focused on our test and learn approach.
We are testing various things in parallel and will well adapt and fine tune our strategic direction as I said in the latter.
As we see the results.
And just to clarify your statement about you know declining on the yield so so that headwind specifically to the large scale testing you have on performance advertising as far as the testing that you did with some they all the t. advertiser, including booking dotcom that continued to be positive is that fair to say.
The the what I said is that they.
Mobile digit potentially double digit impact is just the impact of the test.
So we did not comment specifically on the underlying business performance. There. There is there is a headwind.
Overall through the Corona virus, clearly I mean, much much stronger than national Pacific than in other markets, but you do see it to certain extent in other markets as well and.
And there is some general softness and and Europe in rest of world overall, but.
Yes, I mean, those are basically the three ingredients that you need to put together to to come come up with an estimate of the trajectory.
Indonesian thanks.
[noise]. Thank you.
Your next question comes the line of Shyam Patil. Please ask your question.
[laughter]. Thanks, its Ryan on for Schrom I'm, just wanted to ask about your alternative accommodation strategy in 2020 kind of how material that can be to the business and then secondly, you talked about Google little bit in a letter.
How do you view the role of Mehta going forward given googles recent initiatives. Thanks.
Yeah.
And alternative accommodation way.
The focus of last year has really been too to increase the overall.
Overall availability and also to build relationships with all the key players in the market, whereas this year. The focus is on really improving the product.
So what you what you can expect to see as more and more product features that are specifically.
Designed for alternative accommodation and a better integration of alternative accommodation into our standard flow.
So they are we are we've got a nice pipeline of things that we're working on.
In terms of financial impact.
I don't think it's fair to say that that this well have a huge impact on this year. I mean, this is more a strategic direction of ours, where we do believe that the increasing hybrids user behavior and increasingly hybrid inventories that are out there will lead to a significant growth off.
Demand for a product that is comparing across different accommodation types, but these kind of things don't happen from one day to the other those are more trends that evolve over years. We do believe that we are we are currently leading in terms of offering a tool in that direction and we want to continue to lead that development. So it is it is more a strategic direction.
But we do think will be a big differentiator in the future.
Okay.
Oh, sorry, there your second question on Bon Google.
Yeah in terms of in terms of product changes product development.
There are obviously continues to changes in the product, but we don't see a significant change there we see that dynamic.
Pretty much stable what does the future of match up.
We continue to believe that there is a pretty significant user segments that is requiring a matter products because they are not decided and they are they are traveled frequency as is a moderate.
And we do think that by offering a focused and specialized product we have an edge over a generalist.
On the other half time, it's also fair to say that by competing with a player that has a very very large share off.
Music starting every single journey on the platform that is a key advantage so.
It will be well be a tough competition going forward, what we do believe by specializing and developing a tailored product just specifically for recommendation search we will continue to have an AD from a use of value perspective.
Thanks.
Thank you.
The next questions come from line of took on Maam. Please ask the question.
Okay.
Hi, This is the on for Doug. Thanks for taking my questions I have two.
The first ones around on privacy focus regulatory impact from changes that limit Targetability has been a focus lately I'm just curious to hear if you're seeing any changes in your ability to target users in your marketing channels.
Second the you talked about large scale testing affect things develop Europe revenue and are on the virus in rest of world just wondering what you're seeing in terms of or what you're expecting from Americas since batteries in Britain seems to have the kind of issue that you have in both Europe and rest of world.
Yeah. Thanks, D. So on your first question I guess, you're referring to the.
In addition in Australia.
I mean, there the quote provided new guidance on how results of comparison sites like Trivago and others should be displayed in Australia.
We've been working to understand the implications of this decision on our website design.
It's Olympic on the Australian travel industry and the way websites are to be design in Australia.
Obviously, we keep we plan to keep operating in upstream website, and we will take steps to comply with the requirements communicated in the decision.
If how it relates to other jurisdictions.
I mean there.
The only thing I would say is part of the courts opinion included views that differ significantly from those of other national regulators that we have worked with.
But that being said, we expect to continue to see an increasing regulatory scrutiny on the consumer facing business practices of provide us a one and travel search and booking services.
And your second question was on the large scale test in Europe.
You want to know if we plan anything similar in other regions as well or what was your question.
Well, yeah, just around what you're expecting from Americas in the first half given you are now planning a large scale test, there or who Hong Kong of ours impact should be somewhat limited in that region do you expect growth out there.
Yeah. Thanks, no that is correct. So if you if you look at the two big impacts and four for Q1 and potentially beyond.
The Lasco test is so far limited to develop Europe. So that we do not plan to do that anytime soon in Americas, all the regions and Corona virus, mostly effects.
Countries in rest of the words, so that we see a very very limited impact on Americas. If you look at Q3 in Q4 last year you already saw that Americas was outperforming and that is a trend that continues so far in 2020 and.
Then obviously under two impacts or support that direction.
Got it thank you.
Thanks.
Your next question come for line off.
Really wamsley please ask the question.
Oh, thanks to if I can close just.
Going back to thinking about monetizing sponsored listings.
How do you guys feel about.
Exit media is that something you're investigating as well and what are the key things you're looking to.
Determine as to whether them make these tests permanent.
And then secondly, I guess.
At the time with the idea you always should the cheapest booking auction.
Pop on your each hotel and it was the hotel sort of within that was determined by pricing. So I guess did that I guess that changed when when did that change in kind of what are the key drivers of that of the algorithm for hotel Sir at this point.
Okay. Thanks, a lot like.
On sponsored listings another alternative revenue streams I mean, if you look at the the history of of Trivago and also the product as it stands today. It is extremely lean extremely clean and that is what are you guys. Appreciate.
So the for any other revenue streams. The the challenge is to to increase the revenue per user at the same time not impacting the value proposition and the look and feel off the product. So the the smoother and the more seamless and alternative revenue stream can be in.
Great it into the existing product and the less intrusive. It is the the more likely it is too to be permanent and that is that it's one of the key tradeoffs that we're looking at for any of these revenue streams.
Having said that that's why I actually picked out sponsored listings that is probably off all the different options that we are thinking about one that is most natural if you look at competitors product.
And this isn't very very a non intrusive to the overall user experience and even even positive in a lot of cases.
So so that's the key trade off I mean, any more detail is very difficult to give but that's the that's the basic idea that we are testing and where we are balancing.
The different.
Different data points against each other on the algorithm I mean I cannot share with you exact details when exactly we are changing want because it's obviously very sensitive and also competitive from a competitive perspective topic, but we have continuously changed our algorithms. So it's really evolving and we tend to it too.
Test, obviously I'm all changes that we are doing.
We do think that's the I'm the more recent design shouldn't change is that we have rolled out our.
I'm really industry, leading in terms of transparency and also promoting the core value proposition of hours, which as comparison.
And that the design is better than what we have used in the more recent past.
Okay. Thank you.
Thank you.
Your next question comes the line O'brien. Please ask the question.
Thanks for taking my question I've I've two just to the first one is it's a little bit going back to to Lloyds question of sort of the IPO versus where we are now I guess it actually I'd be curious can hear your perspective as you as you look back over the last few years on and user growth.
Talk to us about sort of some of the biggest learnings you have on what what has worked well and driving users and where are you still face challenges and bring more users that perform and you look over the course, so the next year to to what do you think is the key to really driving faster sustained user growth over the next couple of years.
And then the second one just to kind of get a little more into the 2020 guides, we understand the puts and takes like it was about sort of the expected total spend on marketing and advertising internally that direction going to be up down stable. So how are you thinking about our marketing investment through the 2020 year.
Yeah sure.
So what has worked well in attracting users and what hasn't had that's Uh huh.
That's a very interesting question I think if we just don't go back to the IPO, but even a bit further I mean, the the core differentiator that we've had on the market was also I was always our TV advertisement and.
And by going very very early very aggressively into TV advertisement I think we had a unique opportunity to build the brand even as a relatively speaking small player.
With a unique positioning and I I continue to believe that that is really.
Absolute core of our marketing communication.
When you then look at the at the times off really rapid growth, we saw a big opportunity and also significantly invent invested into performance marketing and since the IPO I mean, we've talked about this many times we have seen this next off traffic mix of roughly 50 50 as as optimal and.
To be perfectly honest there I mean, one of the reasons why we are now conducting these tests that we are not sure that in the current market environment. This mix is still the right mix and and we want to challenge our our view there and see whether it is actually better or two to change that makes going forward.
And if we wouldn't have a hypothesis there obviously, we wouldn't we wouldn't do a large scale test. So so we do thing there is a good chance that the 50 50 is not the right approach for the future, but again as as on on a lot of the other points that we've discussed we have very test and learn driven so we will we will only do things where we.
See positive results from our test. So it is it is too early to be very very certain about the direction, but we have a clear hypothesis there.
And then on your second question on guidance.
So we've decided to not give specific guidance at this point and the reason being that it is quite volatile right now and we are running certain tests that make us very difficult also for us because it.
And the results will depend on the outcome of those test specifically to two AD spend they're the landscape tests. We are running in Europe has an impact obviously on on the level of our AD spend and it's too early to tell what the right level will be but depending on the outcome it could change.
Then in addition to that with the situation in Asia right now.
With the Corona virus, I mean, obviously that you'll see a drop in business volume. So we started to adjust our spend levels and depending on how this develops 'em, we could ramp up quickly again or or spend limited or.
Advertising dollars in that region, so that also a bit but hard to tell.
What I can can say is that revenue will be done.
And we believe that RPQ arm. So revenue per qualified refer it will be broadly flat, including a positive mix shift towards higher IP to our country.
And then as we mentioned in the shareholder letter and discussed earlier, we expect EBITDA to be positive in the first half and Oh ambition is to increase the full year EBITDA year over year.
Great. Thanks, guys.
Thank you Brian.
Your next question comes from line of Tom White. Please ask the question [laughter].
[laughter].
Great. Thanks for taking my question I apologize if I missed this but could you just comment on the impact is any impact from the bid modifiers that you rolled out in the back half of last year, too, there's a quarter or or how their impact maybe contemplated in the outlook and also curious if the outlook.
Resumes you guys rollout any additional you know meaningful bit modifiers for advertisers. Thanks.
Absolutely so they on the on the rolled it off a bit modify as we have to say that the adjustment of all market participants is taking longer than what we anticipated.
And so we still do think that there is some level off I'm not optimal bidding going on with certain advertisers our expectation is that.
Until made of the year at the latest that well well, we'll have been optimized by everybody and we are we're working closely with everybody who needs our support there.
Having said that that doesn't mean that.
They are not additional dimensions and optimizations regarding bit modifiers that are positive from our perspective and that are worth rolling out. So we are we are looking into some other modifications to make the auction even more granular and allow for more targeted bidding.
Which is something that is.
That we do believe is in particularly in the market environment, where the overall growth is coming down becoming more and more important.
So to summarize them there there's still some adjustment going on and we are we're planning to make for the changes, but we well of course consider the pace of of adaptation that adjustment and or we don't want to to rush changes.
Thank you.
Thank you.
Thanks Once again, if you wish to ask a question. Please press star and one on the telephone keypad.
Okay.
[noise], Yes, you got that I know if that's the question Sam Please continue.
Many thanks for joining our Q4 earnings call just to summarize the times are off.
We do have a clear plan and we're focused on what we can control.
Thanks, again and talk to your next quarter.
That does conclude teleconference for today. Thank you for participating in my old disconnect have a nice <unk>. Please standby.
<unk>.
[music].
[music].
[music].
[music].
Good day, ladies and gentlemen, thank you for standing by welcome to Trivago fourth quarter earnings Conference call try to 19 at the time all participants are in listen only mode. After this pick a presentation there will be the question and not to session. So the question Jordan detention, you'll need your press star one on your telephone keypad.
I must advise you the coal is being recorded today Wednesday, the 12 of hybrid Twentytwenty what needs to be joined on the call today by OXXO Hepa, Chewbacca seal and managing director and Mathias feel much trivago see upheld the following discussion including responses to your question Teleflex management's views as of today talk of a good try to 20.
<unk>.
Trivago does not undertake any obligation to update or revise these inflammation as always the statements made on today's call. All forward looking typical preceded by words, such as we expect we believe we anticipate what's the most statement.
Please refer to the fourth quarter operating and financial overview on the Companys other filings with.
It's easy for information about factors, which could cause <unk> actual results to differ materially from these forward looking statements.
You will find reconciliation of non-GAAP measures to the most comparable GAAP measures discussed today into evolved with operating and financial review, which is posted on the company's I all but side.
<unk> dot to Bob <unk> Dot com.
On coverage to be logically be the troubled with investor relations side simple importance content.
Finally, unless otherwise stated all comparisons on the school will be against results.
For the comparable comparable periods of 20 team.
That let me turn the call over to accelerate please go ahead.
Well go talk to you for earnings call and you might have noticed we've changed the format of all relief and said another shareholder lets say yesterday covering the key developments of the business on the market.
Therefore, we are going straight to or keep an eye.
Right. So we're ready to take the first question.
Operator can we take the first question I think question comes from line of Novid Khan. Please go ahead.
Yeah, I think locked up.
A couple of question, so I'm going to prepare XXL, you talked about Oh running our skin test in the past top Oh, Okay, maybe give some color on what kind of test is might be what kind of deal is one of the color.
And then I have some caught off.
Sure I know it.
So thanks, a lot from the question I mean, I hope we can understand that we cannot give more details here beyond what we have just closed already.
But I would say that we're currently running Alondra Incrementality test and certainly performance marketing channels.
And the Amazon that is too high but to really understand better where we're spending efficiently and at the level that is right for us.
And sustainable in the long run, but at this point, we cannot give more detail than what we have disclosed already.
Got it and then Oh yeah.
A few clarification, so I'm on the corner, whereas obviously it seems like it's taken us pretty.
Hi, good, but maybe can you shed some color on like many of the last few weeks, what kind of sand volumes, maybe dropping off or whatever.
That that you're seeing the most and then how maybe.
As it regards.
What it was it plays yeah.
What markets, how do you most exposed to and on the guide maybe so.
Sentence, you expect positive EBITDA should we expect maybe that doesn't grow eurone out or is that not necessarily the case.
Yeah. So on your first question I mean, as you know generally speaking it is very hard for us to quantify what the exact impact of the accrual nobody was it.
We do see a drop in revenue specifically, an Asian Pacific countries. So that's the reason that as most affected.
But again it is very hard fought fonts or any one I'm also to fall cost how this will develop.
And.
We we looked back what other data points out there and obviously losses, one but it can play on very differently and we have not been around as a company back then so at this point, it's too early to say, what the impact would be but as I said, we do see softer business.
In those markets and revenues are down, but how big the excellent pick this is a bit hotter.
On your second question on guidance. So, yes, we said that first top will be positive.
If you look at first off 2019, we we had an EBITDA off around 40 million.
So, saying it's positive means clearly that is down year over year, but as we also said we oh ambition is still for the full year two.
Increase slightly I'll, Oh, EBITDA, so that's awful close, but first off that would be down year over year, but positive.
Great. Thank you.
Thanks next question please.
Thank you.
The next question is come for line Obremski Gerard Please ask your question.
Thanks, guys.
Peter you mentioned in leveraging some of the learnings from your brand campaigns in the Americas.
What do you see working there as it is it some of the recent Mr. Trivago creative anything else you can call out and with the shift in brand messaging towards this value prop.
Price comparison.
How has that been resonating through and what are you seeing in terms of impact traffic and conversion.
Thanks.
Yes, Thanks, Brian.
So in Americas, we we really started to focus more on all key value proposition early last year. So in Q2, that's when we tested.
Slightly more focused message.
And then we we rolled that out although our peak season in Q3 and that we have seen very positive results. So.
Your watch those comercia they asked.
With the Mr. trivago. So in the same concept, but I would say that the key differences that we adjust more focusing and I'm trying to.
Basically a show a what's our key value proposition now so how we compare.
As as we've said before I'm getting the success. We we are planning to adopt those audio for other reasons and we have actually started early this year. So.
Similar spots are running right now in Europe and rest of the world.
However at this point, it's too early to tell if they're equally successful.
But the blend is really to get the insights and dates I know and to be it will be ready for the peak season in Q3.
Great and then I had one another one that missed on.
On the AD mix.
In terms in the market dynamics, an ad spend.
Unrelated party revenue mix I'm on.
Slide in the deck and by the way, Thank you for providing us bar and.
Did the bookings step on the gas that expedia pullback or that everyone pullback in Expedia pullback more I mean any.
Color you can give us on just how that as a bucket is trending.
Yes sure.
So indeed, the they the mix has changed so expedia has reduced the overall relevance for our business and booking has gone up.
But we I mean as as in the past don't don't comment I cannot ready comment on individual appetizers and their their behavior in the marketplace, but the overall results on our revenue mix is exactly what you're describing.
Great. Thanks, guys.
Thank you.
The next question comes from line of James Please ask your question.
Yeah. Thanks for taking my questions just want to update.
A follow up on the question regarding booking dot com and LTAC spending and maybe into context, where you talk about potentially double digit revenue decline you in the first half.
One thing because last quarter, you guys mentioned that you reversed the landing page assessment and you also to some testing.
The thing promising maybe help us to reconcile your statement on you versus you know some deposit development that you've seen with LTE appetizers and also my second question regarding.
A statement that you made the shareholder letter we talk about significant changes.
With that Youll approach with advertisers that include Recalibration of marketing mix changes a marketplace and introducing alternative revenue stream if can elaborate those three elements. Please thanks.
Okay. Thank you for the question I think a question wanted to related so just to clarify the comment in the latter. So we are conducting a very significant tests and the first half of the year add that are aiming to optimize and recalibrate outperformance marketing spend.
And the expected impact of that on rest of the world.
Just have that optimization alone.
Maybe double digit so thats, how how the two two questions I think our related so that is just the impact of the testing.
And in addition to to the underlying business performance.
The the results of the test, obviously, a very difficult to forecast, but the aim of these tests as true to calibrate the spends to an optimal level.
[music].
Yes, so you're coming to us to your third question alternative revenue streams.
So we are running various tests to.
To test whether other revenue streams than our traditional.
CPC based revenue are.
Relative to the overall business and as with any Tas, it's difficult obviously to share to imagine thought because they are their test as they have stood uncertainty one that.
I can share is that.
One of the revenue streams that we're looking into his ask one so I'd listings. So we are as of today as far as I know.
One of the very very few.
The remaining players in the industry does does not offer the opportunity to two really sponsor listing and significant booster lifting.
And.
And there is significant demand for that product coming from a advertisers, it's a very frequent rate request.
And wave we starts to build infrastructure.
Terrific cash this concept.
Couple of months ago, and our testing edge as of today as we speak.
So that that is.
Potentially promising alternative revenue stream, but they also others that we look into but even with the sponsor listing just to be very clear. If we are not satisfied with a test results will not proceed. So we continue to stay very focused on our test and learn approach.
We are testing various things in parallel and will.
Adapt and fine tune, our strategic direction as I said in the latter.
As we see the results.
And just to clarify your statement about declining on the yield so so that headwind specifically to that large scale testing you have on performance advertising as far as the testing that you did with some they all the t. advertiser, including booking dotcom that continued to be positive is that fair to say.
The the what I said is that the.
Double digit potentially double digit impact is just the impact of the test. So we did not comment specifically on the underlying business performance.
There there is there is a headwind.
Overall throw the Corona virus, clearly I mean, much much stronger than national Pacific than in other markets, but you do see it's just certain extended another market as well and.
And there is some general softness and in Europe in rest of the world.
Overall, but.
Yes, I mean, those are basically the three ingredients that you need to put together to to come come up with an estimate of the trajectory.
Thanks.
Thank you.
Your next question comes from line of Shyam Patil. Please ask your question.
Thanks, its Ryan on for Schrom.
Just wanted to ask about your alternative accommodation strategy in 2020 kind of how material that can be to the business.
And then secondly, you talked about Google little bit in the latter.
How do you view the role of Mehta going forward, given googles reason initiatives. Thanks.
I'll turn it back termination way.
The focus of last year has really been too.
To increase the overall.
Overall availability and also to build relationships with all the key players in the market, whereas this year. The focus is on really improving the product.
So what you what you can expect to see as more and more product features that are specifically.
Designed for alternative accommodation and a better integration of alternative recommendation into our stand that flow.
So they are we are we've got a nice pipeline of things that we're working on.
In terms of financial impact.
I don't think it's fair to say that that this will have a huge impact on this year. I mean, this is more a strategic direction of our us where we do believe that the increasing hybrids user behavior and increasingly hybrid inventories that are out there will lead to a significant growth off.
Demand for a product of this comparing across different accommodation types, but these kind of things don't happen from one day to the other those are more trends that evolve over the years.
We do believe that we are we are currently leading.
In terms of offering a tool in that direction that we want to continue to lead that development. So it is it is more a strategic direction that we do think will be a big differentiator in the future.
Okay.
Sorry, yes, it second question on upon Google.
Yes in terms of in terms of product changes product development.
There are obviously continuous changes and the product.
But we don't see a significant change there we see that dynamic.
Pretty much stable.
What does the future of match up.
We continue to believe that there is a pretty significant user segments that is requiring a matter products because they are not decided and they are there.
Traveled frequency as is moderate.
And we do think that by offering.
Focused on specialized product, we havent match over our generalists.
On the other hand, it's also fair to say that by competing with a player that has a very very large share off.
Music stopping every single journey on the platform that is a key advantage so.
It will be well be a tough competition going forward, what we do believe by specializing and developing a tailored product just specifically for recommendation search we will continue to have an edge from a use of value perspective.
Thanks.
Thank you.
The next questions come from line of the.
Please ask the question.
Okay.
This is the on for Doug Thanks for taking my questions.
Two.
The first one is around privacy focus regulatory and platform changes that limit Targetability has been a focus lately I'm just curious to hear if you're seeing any changes in your ability to target users in your marketing channels and then secondly, you talked about large scale testing affect things develop Europe revenue and grow.
On the virus in the rest of World just wondering what you're seeing in terms of or what you're expecting from Americas since batteries into them to have the kind of issues that you have in both Europe and rest of world.
Yeah. Thanks, Steve.
So on your first question I guess, you're referring to the.
Litigation in Australia.
I mean, there the quad provided new guidance on how resides of comparison sites like Trivago and others should be displayed in Australia.
We've been working to understand the implications of this decision on our website design.
And its overall impact on the Australian travel industry and the way websites to be design in Australia.
Obviously, we keep.
We plan to keep operating in Australia website, and we would take.
Thats to comply with the requirements communicated in the decision.
And.
If how it relates to other jurisdictions.
I mean there.
The only thing I would say is part of the courts opinion included views.
If up significantly from those of other national regulators that we have worked with.
That being said, we expect to continue to see an increasing regulatory scrutiny on the consumer facing business practices of provide us a one and travel search and booking services.
And.
Second question was on the landscape test in Europe.
You want to know if we plan anything similar in other regions as well or what was your question.
Rob.
Just around what you're expecting from Americas, and the first half given youre not planning large scale test, there or who Hong Kong of ours impact should be somewhat limited in that region do expect growth.
Yes. Thanks.
No that is correct. So if you if you look at the two big impacts.
For for Q1 and potentially beyond.
The Alaska test is so far limited to develop Europe. So that we do not plan to do that anytime soon in America us all the regions Corona virus, mostly effects.
Countries in rest of the word so that we see a very very limited impact on Americas. If you look at Q3 in Q4 last year.
We already saw that Americas was outperforming.
And that is a trend that continues so far in 2020 and.
And obviously the two impacts.
To support that direction.
Got it thank you.
Thanks.
Your next question comes for line of.
Lloyd Wamsley. Please ask your question.
Thanks, Tim if I can close just going back to thinking about monetizing sponsored listings how do you guys feel about.
Media is that something you're investigating as well and what are the key things you're looking to.
Determine as to whether them make these test permanent.
And then secondly, I guess.
At the time will the IPO, you always should the cheapest booking auction.
Top ordinary true telling it was a hotel sort order that was determined by pricing. So I guess did that I guess that changed.
Well when did that change in kind of what are the key drivers of that of the algorithm for hotels there at this point.
Okay. Thanks, a lot.
On Spondon listings another alternative revenue streams I mean, if you look at the history of off Trivago and also that product as it stands today.
It is extremely lean extremely clean and that is what are you guys. Appreciate.
So the for any other revenue streams. The the challenge is to to increase the revenue per user at the same time not impacting the value proposition and then look and feel off the product so the the smoother and the more seamless.
Turning to grabbing a stream can be integrated into the existing product and the less intrusive. It is the more likely it is true to be permanent and that is that is one of the key tradeoffs that we're looking at for any of these revenue streams.
Having said that Thats why I actually picked out sponsored listings.
That is probably off all the different options that we're thinking about one that is most natural.
If you look at competitors products.
And this isn't very very in non intrusive.
Through the overall user experience and even even positive in a lot of cases.
So so thats the key tradeoff.
I mean any more detail it is very difficult to give but thats. The if thats. The basic idea that we are testing on where we are balancing.
The different.
Different data points against each other on the algorithm I cannot share with you exact details when exactly we are changing a lot because it's obviously very sensitive and also competitive.
From a competitive perspective topic, but we have continuously changed our algorithms so as really evolving and we tend to it to test obviously all changes that we're doing.
We do think that's the the more recently Johnson changes that we have rolled out our.
Really industry, leading in terms of transparency.
And also promoting the core value proposition of hours, which as comparison.
And that the design is better than what we have used in the more recent past.
Okay. Thank you.
Thank you.
The next question comes from line of Brian. Please ask the question.
Thanks, taking my question I've I've to just the first one it's a little bit going back to.
The Lloyds question of sort of the IPO versus where we are now I guess it actually I'd be curious kind of your your perspective as you look back over the last few years on on user growth.
Talk to us about sort of some of the biggest learnings you have on what what has worked well and driving users and where you still face challenges and bring more users to perform as you look over the course to the next year to to what do you think is the key to really driving faster sustained user growth over the next couple of years.
And then the second one just to kind of get a little more into the 2020 guides, we understand the puts and takes our to us about sort of the expected total spend on marketing and advertising internally that directionally going to be up down stable. So how are you thinking about our marketing investment through the 2020 year.
Yes sure.
So what has worked well in attracting users and what hasn't.
That's a.
That's a very interesting question I think if we just don't go back to the IPO, but even a bit further I mean, the the core differentiator that we've had on the market was also I was always our TV advertisement and.
And by going very very early very aggressively into TV advertisement I think we had a unique opportunity to build a brand even as a relatively speaking small player.
With a unique positioning and I I continue to believe that that is really.
Absolute core of our marketing communication.
When you then look at the times already rapid growth.
We saw a big opportunity and also significantly invent divested into performance marketing and since the IPO and we've talked about this many times we have seen this mix of traffic mix of roughly 50 50 as as optimal and.
To be perfectly honest there I mean, one of the reasons why we are now conducting these tests that we are not sure that in the current market environment. This mix is still the right mix and.
And we want to challenge our.
How are you there and see whether it is actually better to change that mix going forward.
If we wouldn't have a hypothesis there obviously we wouldn't.
We wouldn't do a large scale and test. So so we do thing there is a good chance that 50 50 is not the right approach for the future.
But again as as on on.
A lot of the other points that we've discussed we have very test and learn driven so we will we will only do things, where we see positive results from our test.
So it is it is too early to be very very certain about the direction, but we have a clear hypothesis there.
And then on your second question on guidance.
So we've decided to not give specific guidance at this point and the reason being that it is quite volatile right now and we're running certain test that make us very difficult also for us because it.
And the results will depend on the outcome of lost test specifically to ad spend.
The landscape tests, we are running in Europe.
Has an impact obviously on the level of our AD spend and it's too early to tell what the right level will be but depending on the outcome it could change.
Then in addition to that with this situation in Asia right now.
With the Corona virus.
Obviously that you'll see a drop in business volume. So we started to adjust our spend levels and depending on how this develops we could ramp up quickly again or.
Spend limited.
Advertising dollars in that region. So.
Also a bit bid hotez.
I mean, what I can can say is that revenue will be done.
And we believe that.
PQ arm so revenue per qualified refer will be broadly flat, including a positive mix shift towards higher MPPR countries.
And then as we mentioned in the shareholder letter and discussed earlier.
We expect EBITDA to be positive in the first off and on business for the third to increase the full year EBITDA year over year.
Great. Thanks, guys.
Thank you Brian.
Your next question comes from line.
Tom White, please ask your question.
Great. Thanks for taking my question I apologize if.
Mrs. But could you just comment on the impact of any impact from the.
Good modifiers that you rolled out in the back half of last year, too theres, a quarter or or how their impact maybe contemplated.
In the outlook and also curious if the outlook presumes that you guys rollout any additional.
It's a bit modifiers for advertisers. Thanks.
Absolutely so.
They are.
On the on the road it off a bit modify asked way.
I have to say that the adjustment of all market participants is taking longer than what we anticipated.
And so we still do we think that there is some level of not optimal bidding going on with certain advertisers.
Our expectation is that.
On sale made of the year at the latest that well.
What have been optimized by everybody and we are we're working closely with everybody who needs our support there.
Having said that that doesn't mean that.
They are not additional dimensions and optimizations regarding bit modify that are positive from our perspective and that are worth rolling out. So we are.
We are looking into some other modifications to make the auction even more granular and allow for more targeted bidding.
Which is something that.
Is that we do believe is in particularly in the market environment, where the overall growth is coming down becoming more and more important.
So to summarize them, there's still some adjustment going on and we are.
We are planning to make further changes, but we well of course consider the pace of of adaptation that adjustment and.
We don't want to to rush changes.
Thank you.
Thank you you participants once again, if you wish to ask a question. Please press star and one on the telephone keypad.
Keith you got that on assets that question Sam Please continue.
Many thanks for joining our Q4 earnings call.
To summarize the times are off.
We do have a clear plan and we are focused on what we can't control.
Thanks, again and talk to your next quarter.
Okay.
That does conclude teleconference for today. Thank you for participating all disconnect have a nice.
Please standby.