Q4 2020 Trivago NV Earnings Call
[music].
Good day, ladies and gentlemen, thank you for standing by and welcome to the Trafalgar Q4 earnings call Twenty-twenty I must advise you. This call is being recorded today Wednesday, the 10th of February 2021.
We are pleased to be joined on the quotes day by X, where he said you fuckers CEO and managing director and not just tell him and Chicago CFO and managing director.
The following discussion including responses to your questions reflects management's views as of today Wednesday February the 10th 'twenty 'twenty, one and knee.
<unk> does not undertake any obligation to update or revise this information as always some of the statements made on stays cool are forward looking typically preceded by words, such as and we expect we believe we anticipate or similar statements.
Please refer to the Q4, 'twenty and 'twenty operating and financial review and the company's other filings with the SEC for information about factors, which could cause <unk> actual results to differ materially from these forward looking statements.
You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today and in Trafalgar and operating and financial review, which is posted on the company's IR website at IR <unk> com.
And encourage to periodically visit <unk> Investor Relations site and.
Important content finally, unless otherwise stated all comparisons on this call will be against results for the comparable period of 2019.
With that let me turn the call over to Axel.
Good morning, everybody and welcome to our Q4, 'twenty and 'twenty earnings call.
It has been a year by now since we filed our Q4 earnings on February 11th 'twenty and 'twenty and for the first time since we went public we did not give any specific guidance for that year and new virus had started to spread and parts of Asia.
Looking back I have to say that it was nothing like what we were anticipating a year ago, the collapse of global travel and March.
Global Lockdowns that made the world's standstill strong local travel demands and summer and then the second wave that I've had so many countries and all of them the.
And the burden of contact restrictions is wearing heavily on children and families and the elderly.
However.
One here and there there's hope there's a clear path to and Odyssey and a lot of progress has been made.
Vaccines have been developed and record speeds governments have supported citizens and businesses generously and vaccination programs that rolled out across many markets focusing on protecting the most vulnerable.
Looking forward, we do believe that everyday and every week is bringing us slowly but steadily closer to normalcy from now on some countries like Australia, China, and you've seen and have through a very strict measures already managed to return to and almost normal daily life, while countries and I guess route the U K and the U S are progressing rapidly with <unk>.
Vaccination programs and should see gradual improvement and the second quarter.
Overall, we believe that by summer most major markets will have made significant progress to allow for local activities and travel and gives us citizens relief and time to relax after a very long and difficult period.
Like in the summer 'twenty and 'twenty, we believe that there will be very strong demand for local travel and perhaps even international travel and we continue to prepare for that moment.
And as a basic need and we believe it will come back as soon as the pandemic is under control.
For the first half of 'twenty 'twenty, one and this means that we will continue to focus on adapting and improving our value proposition towards our users and advertisers.
Our key focus areas will it be new feature development and improvement of our core product.
The further development and rollout of our local travel product and.
Adjusting our marketing mix and communication to the current situation.
Rolling out on your advertising facing products to prepare for a recovery and.
To keep morale up and continue to invest into developing and strengthening our team.
With that and I'll hand over to him a T S.
Thank you Alex and good morning, everyone.
We normally experience a decline and travel activity and the fourth quarter as we are coming out of the peak summer holiday season, and the northern Hemisphere Q.
Q4, 2020 has not been different and.
In fact, the sequential seasonal decline and our segment developed Europe was more pronounced compared to prior year.
As most of our core markets and that segment implemented new lockdown measures and.
Excluding new travel restrictions to contain the spread of the virus.
Consequently, we reduced our marketing activities, even more than we usually do and the fourth quarter to preserve our cash.
And on the other hand for countries that entered the peak summer season, like Australia or Brazil.
The sequential increase and qualified referrals and this led to a substantial improvement and the year over year qualified referrals decreases and those countries.
And for our segment Americas of oil.
However, as all of our booking volumes were still significantly below 2019 levels, we continue to be cautious with our marketing activities and focus on high quality traffic.
The reduction in marketing and operating expenses led to a decrease of overall cost and expenses by 71% and the fourth quarter compared to the same period and 2019.
Excluding advertising expenses operational expenses, including share based compensation decreased by $18 million or 37% year over year.
As a result of the restructuring that we announced during the summer.
Hence we were able to limit the net loss to $8 6 million and our adjusted EBITDA to minus $3 4 million compared to a net income and adjusted EBITDA.
$3 1 million and $18 $4 million, respectively, and the same period of 2019.
Looking at the full year, we were able to maintain our total cash and short term investment position at around $228 million without taking on any additional external funding and we continue to be debt free.
This shows how quickly we can adapt to sudden and very unfavorable changes in our industry. We remain confident that we have the right setup for what remains a challenging and predict.
Unpredictable foreseeable future.
Globally, the number of new Covid cases increased again during the fourth quarter and new variance of the virus have emerged they tend to spread faster.
Consequently, most of our core markets have implemented new mobility restrictions and particularly in Europe that were extended into the new year.
For example, Germany first extended and extended the lockdown until the 10th of January and then until mid February and the government is currently discussing two day extended further into March.
Hence overall qualified referral growth rates have declined again in January.
However, there are regional differences and developed Europe qualified referrals were down around 80% year over year in January.
And to put that in perspective and April last year. When similar restrictions were implemented during the first wave our qualified referrals declined by over 90% and that segment year over year.
At the same time, we are observing an increase and the booking window and Europe with the average booking window being no more than 10 weeks.
And Americas qualified referrals were down more than 50% and January year over year down slightly more than in the fourth quarter as the year over year qualified referral decline and Latin America increased a bit again, whereas we see stable trends and the U S.
Looking at our segment rest of World overall qualified referrals a year over and net negative growth rates have been stable and January compared to the fourth quarter.
When looking at the year over year growth rates. Please keep in mind that our business started to deteriorate in February 2020, when the virus spread to Europe and Americas. So for the coming months, we need to take the comp effect into account.
Moving on to marketplace dynamics, and all three segments, while monetization is still down significantly year over year. Our revenue per qualified referral has declined by a rate that was stable sequentially and the fourth quarter and we see this continuing in 2021 so far.
As a result on a global referral revenue, which is the product of qualified referrals and revenue per qualified referrals declined by a rate that was slightly higher and January compared to the fourth quarter due to the qualified referral dynamics and the different segments that I just described.
<unk> situation remains volatile and we continue to have only limited visibility we will not give specific guidance for 2021 at this point.
We focus on what we can control and for the first quarter. This means that we will be debt, we will continue to be cautious with our marketing activities.
As mentioned before we have we have sustainably reduce our operating expenses. However, as the second wave of new Covid infections has emerged and overall booking volumes remained muted we expect our adjusted EBITDA and the first quarter to be more negative than in the fourth quarter.
Overall, we remain confident that we have set up the company for this change and environment and continue to be optimistic that travel will recover and the second half of this year.
With that let's open the line for questions.
Operator, we're now ready to take the first question. Please.
And as I said, a reminder, ladies and gentlemen, and star one if you would like to ask a question on the.
Our first question comes from the line of Nevada.
Securities. Please go ahead your line is open.
Yeah, Hi, Thanks, and I'll just a couple of questions. So maybe can you give us some.
And more color on the trends.
It is on North America.
And how does it compare to Europe, and just for the fourth quarter, if I look on the volume of <unk>.
Qualified referrals.
On North America.
It was essentially flat from Q3 and Q4.
Europe, we're obviously saw a pretty strong vehicle and screen and maybe just.
Speak to that and then secondarily, if I think about and be the back half of 'twenty and 'twenty, one and the recovery how should we be thinking about your AD spending as day.
And im starts to come back.
And your spending going into that.
Sure things and have it.
So on your first question trends in North America versus Europe.
I mean, I guess, some specific numbers for the <unk> growth rates and January already.
And would add the following.
Qualified referrals will obviously depend on the overall travel demand and on marketing spend going forward, but what we what we see and generally sulfur is that the trend is stable and the U S and obviously as I said and Europe.
And it's no surprise that.
And we do not see a change in January so far.
And that.
Most countries started to implement new travel restrictions already in November.
And that has continued in December and.
And now going into the new year.
So and.
Overall, as I said, 80% down year over year and.
In Europe.
Slightly better than what we saw on April 2020, when we first put restriction and too.
Let me first so on travel restriction and put into place by governments and.
And in Americas.
I mean.
As I said the U S stable.
What we do see some encouraging signs.
And that is obviously correlated or not obviously, but something you could expect to the progress on the vaccination. So when you look globally, we called out Israel, and the UK and Europe, where we do see debt. These countries are making progress and.
If you look outside of Europe, Youll see that in the U S.
You are progressing faster than in most other European countries and there we do see some positive signs and.
And also performance marketing channels, but still on a very low level.
And.
But it is encouraging to see and.
I would expect debt.
If we continue on that path that the situation will go.
Get gradually better.
And.
On on your second question.
How to think about.
The marketing spend.
I mean as a general comment right now as I said in Q1, we are cautious which means we do not spend a lot on brand marketing.
Given that and that channel Youll pay big time, usually spreads.
Over months and quarters.
So when you do that obviously it is expensive and you do want to be sure that there is enough demand and debt with China is that we have at hand that you can run effective campaigns.
I think it's too early at this point and we don't see debt right now and you should not expect us to spend a lot and Q1.
And then for the rest of the year I mean Q2, the situation could get a bit better, but obviously, it's hard to tell.
And there is a lot of uncertainty and we run a similar approach to last year. When we came out of the period in April and May where we stopped.
Altogether and every market and then clearly looked at the different markets with different strength trends, we were seeing and then decided literally week by week, where we think it makes sense to invest and then went into.
And two opportunities that came up so.
I mean, that's a similar approach we.
And we envision right now for Q2, we are as we said a bit more optimistic about Q3.
And that we are also planning.
Some some digital campaigns, where obviously you have to do some work now you also have to invest into debt in terms of production costs et cetera.
So that you do commit some.
<unk>.
Some money, but we are optimistic that this will.
And <unk>.
And then probably Q3 at a time when we when we win.
Do more and in terms of marketing.
And lastly on performance marketing I mean debt is straightforward.
We do have our ROI targets, we we do look at the competition and the auction and we look at pockets where.
And we can.
Invest and.
Overall.
Reacting to the situation.
And be more aggressive where we see it makes sense.
But for now being cautious keeping our cash together and.
And then we'll invest when we see.
Positive signs.
Good morning, Thank you for that growth.
Sure.
Next question comes from the line of James Lee from Mizuho Securities. Please go ahead. Your line is open.
James Lee Your line is open.
Thanks for taking my question.
Two here.
First on alternative accommodation and can you help us understand what the contribution is as a percentage of.
Qualified referrals here I think in the past you've mentioned about 20% and also any specific strength alternative competition that you can point out here and also a second.
Last quarter, you guys talked about normalized activity and second half I was wondering you assumption stoping that case.
Pushing that.
And back a little bit here. Thanks.
And thank you James I will take your first question and then pass it onto Axa.
And so on alternative accommodations.
We do not share.
And our.
Our mix of Commendation mix on a quarterly basis, we did provide a data point.
During summer, where we said for the first time and and you mentioned that the share was above 20% and.
And in General this has been a trend.
We have seen for a while and that's why we went into the segment and of 2017 already and buildup of inventory.
We have over three 8 million units and <unk>.
That segment.
And obviously that debt.
And obviously, but its something you could expect and we've seen debt.
And with the pandemic and.
And.
And on the indexing of Citi trips debt.
That segment.
Gained share and in particular in July and August net was strong and it has.
Reverse a little bit, but overall, if you look at the year over year the share auto and on our platform is still higher than what we had was a year ago.
And I would not expect.
Debt.
Net trend materially reversed from here, but.
I can't give you a specific number.
But it's not that different from what we disclosed before.
On on your second question.
How have you on the second half has changed since the last earnings call. So the the positive view on the second half is basically.
Driven by the success of the vaccination programs plus plus the impact of the weather and summer weather and summer has not change but on the the view on the vaccination programs. There. There are two key levers availability of vaccine and and the logistics already rolling out.
Vaccination programs with some new requirements that we have not seen before and particularly for the for the buy on tech vaccine and there the success in and particularly in Israel, but also in other countries is giving us more comfort and we had a quarter ago that.
And there will be a sustainable recovery and the second half and debt that's pretty much most of our large markets will have offered vaccines to the majority of the population by the second half of the year. So overall and more positive because of these new data points that we've now experience on the loss.
A couple of months.
And excellent just a follow up question I just wanted to ask a question about business philosophy right given this a lot of.
Pressure on meta search.
Bottom of funnel conversion.
Business at this point and time is the overarching goal for your company to diversify into more content and media.
Platform and moving Europe, maybe traffic to the upper a and the mid funnel and to monetize on.
GAAP perspective.
Total relying just on driving conversion and thanks.
So we.
Our historic strength that day at the bottom of the funnel. So so really the and the time before you want to make a booking to compare prices and by doing that we do believe we generate a lot of value to our users.
Some of the new products that we are developing and that we have also acquired obviously as you rightly say slightly further upper funnel. So they do have not only the conversion and element, but they also have and inspirational element.
And Thats why we were also very very excited about the acquisition of weekend dot com, because the inspiration and product about local travel and where we combine ideas where to travel to plus the price comparison.
And is nicely complemented now through that acquisition, where we can offer package tours for our city trips that are at a different use case and a different source of inspiration for four weekend trips once the world has normalized.
Okay, great. Thanks.
Thank you and your next question comes from the line of Brian Fitzgerald of Wells Fargo. Please go ahead. Your line is open.
Thanks, guys I had a couple of questions you talked about the extension and the booking window and Europe. Some travelers are booking out this.
And the summer season, do you see travelers, making the assumption that they will be able to travel pretty broadly throughout Europe, maybe even beyond Europe.
And you or do you see them still looking very closely at home as they did before.
And then and then I got one follow on after that.
Sure so on.
On the booking window.
Generally speaking our book and mineral tends to be relatively short and what I mean by that is that usually people are coming to all of that site.
With the intend to book something that is on average less than eight weeks out with some variations obviously between regions and countries.
Now the time to travel window has naturally increased in January and Europe as I mentioned as many European countries reinstated mobility restrictions, which makes last minute travel and travel obviously very difficult on not possible at all.
On the booking window is not increasing because we see a lot of pent up demand coming to the market for summer bookings, but because of the fact that short term travel is not possible.
And so I would argue that there is no significant shift and I believe that and most of our relevant segments people are holding back for now and in some service we have seen encouraging data like that people still have travel plans and want to go somewhere when it is possible again.
As we are coming closer to summer and AV and travel restrictions are being lifted we expect to see more of that pent up demand coming through that is currently being held back.
And then on the real quick.
Wrinkle to that was do you are you seeing them I get the booking window extending or are you seeing people, though look for are they broadly thinking they could.
Extend travel a little broader throughout Europe or are they still.
Natural locations closer to home.
So that's a bit too early to tell but our expectation is that as much as I said, there will be very strong demand to get a break coming out off.
The lockdowns.
And that's debt the most natural starting point for that demand will be clearly local.
For Continental travel it will depend on.
A bit more on the relative progress of the vaccination programs, because you will need to and have made progress and the and the source market and the destination market to have them on these travel bubble. So so that is.
On possible for certain Paris, part, but it is not as as certain and Intercontinental travel. We believe will be would be very very slow to recover this year.
So and in a way we are we are we have to stay flexible and and react quickly, but we are preparing for a very strong local.
Recovery and possible continental recovery.
Got it and then the second question was and the letter you talked about some of the consumer viewership shifting from linear to digital channels at a high level thought on the kind of pricing of ROE as you were seeing and some of the digital brand channels connected TV.
Versus what you've seen historically and linear TV.
Yes.
Obviously, I cannot talk about exact pricing et cetera, and.
Let me, let me start with saying that and TV will continue to play an important important role and our Brent market marketing makes them.
But and.
And as viewership has declined and in particular among younger audiences is stellar and mass medium and very and a very effective channel for us and in particular.
Golf Cpm's et cetera, So we have tested connected TV and other channels and the path and.
It's not like for like comparable.
And as I mentioned here.
You can be more granular with those channel and in particular, what we want to do because.
And in the recovery phase.
People will not return at all at the same but might return at different points in time.
So in some markets TV might not be the most effective channel when the recovery starts.
And we might want to use digital channel first or in addition to traditional TV advertisement.
And I appreciate it thanks guys.
Thank you.
Thank you and your next question comes from the line.
And of Lloyd.
<unk> at Deutsche Bank. Please go ahead your line is open.
Alright, Thanks, guys two questions first just when you look at the shift the CPA based bidding.
Think this is a permanent shift or do you think we revert to kind of CPC based bidding.
After the pandemic over and and I guess thinking about this.
This impair monetization, we don't get credit for kind of trial and and branding benefits. The otas get from from the traffic or do you think you'll be able to get full value of that.
Versus what Youre getting pre pandemic and and I guess a related question would just be.
Can you kind of elaborate a bit more on some of the changes you've flagged.
Round.
Views on on cancellation rates and the volatility and the auction.
Sure on on the rollout of the CPA I mean, it is not it's not and you ask from our advertisers so even before the pandemic there wasn't particularly from the smaller advertisers.
<unk> desire to basically outsource a conversion risk and the full bidding technology and intelligence to us and so that's why we believe that debt development effort that we put into the product well will be will have a lasting benefit.
For a certain segment.
On the what is what has opened.
<unk>.
Whether it's some of the larger advertisers that have now moved to CPA.
And then move back to on CPC bidding to be able to.
To incorporate some strategic thoughts that they would not necessarily share with us for us to incorporate and our algorithm and and incorporate that directly into the CPC EBIT.
But yes.
Yes.
So that's unclear, but overall, we believe the product will stay.
The experiences that we've made so far are positive. So we do believe that we can offer a greater efficiency both to our partners and also to our marketplace by taking over the.
On the bidding for them.
And so yeah. So that's also positive.
The second question on the volatility and the.
And the marketplace and the overall situation is quite volatile to be on SaaS, if you're adjusting back to in November.
There was a.
Sudden re and position of restrictions, which led to two and <unk>.
India drop and activities.
All the time.
And in the end of Q4, where you had quite a bit of activity for example to the Canary Islands and out of the UK out of Germany that stopped basically from from one day to the other.
And you have very very different reactions to these kind of changes some advertisers basically react immediately.
And and and drop their bids very quickly assuming very high cancellation rates other.
And take a bit more time and use more ultimate ultimate isms and Theyre biddings.
Given that they are these events that debt significantly change the cancellations and the short short term and debt you have very very different.
Tactics to react that obviously makes the overall marketplace more volatile having said that that the more stable. The outlook is and right now the outlook is relatively speaking stable the lesser of and a worry that is for us.
Alright, guys.
And Youre cross for a better second half environment. Good luck.
Thank you.
Thank you and your next question comes from the line of.
Kevin Kopelman at Cowen and company. Please go ahead your line is open.
Great. Thank you so much.
Uh huh.
And I had a couple of questions and first one just a.
Quick follow up on the U S.
You mentioned that it was it was relatively stable and January can you clarify is that on a year over year basis and was that because typically in January and would you see.
Seasonal uptick and kind of planning and and.
Traffic on the site.
Sure. Thanks, Kevin.
So yes, my comment referred to.
The development being stable sequentially and so when you when you look at the.
Qualified referrals and growth rates in the fourth quarter.
That was that was stable and in January and so.
Obviously, we only disclose the segment Americas.
But I mean, some comment early on and last quarter.
And it gives you some idea about the U S and there.
We did see in January.
Year over year qualified referral growth rates.
But broadly stable.
And obviously.
And significantly lower than January 2020, as I said.
The situations that was pre pandemic and then only in March.
And we saw things deteriorating and the U S.
From a traffic perspective.
Got it and is there is there a seasonal just a regular seasonal uptick in terms of just if you look at the January patterns on a Q over Q basis.
Our month over month.
I mean, that's implicitly and the ASO the growth rate is stable.
And you hit the seasonal effect in January last year. So then you'll have it also this year.
Alright, great and I had one other question could.
Could you talk a little bit more you touched on it earlier, but on.
Could you talk to us about the weekend Dot Com acquisition, and just give us a little more color on.
On a weekend dot com and and the business model for for that site and how it compares maybe how it compares to.
Existing Chicago, and just to give us a better sense of that.
Sure.
So the.
One thing that the pandemic has.
I won't impact the pandemic has had is that there is less certainty and so less certainty way can travel what.
And what to expect and and how to return and that that will persist from our perspective for some time so in particular for.
For easier to reach destination short trips, we do believe that there is a need for more inspiration.
And.
And that's why we have developed our local travel product and that's also why we acquired weekend Dot com. So we do believe that as a complementary service to our users.
Whenever they have not made up their mind already which is where our core product is very strong and need some inspiration to to offer suggestions of great destinations and then also great dates.
Went to travel there by plane to get a good price for for.
And for the plane and the hotel combination.
And that's where we're also the positioning is and the target segment is similar our users do want to save money and are price conscious and the weekend on Com offers you exactly the same inspiration for trips at the at the best possible price.
So it is complementary.
And it's not a price.
And the fact that it is a price comparison, because it's dynamically packaging hotels and.
And and and flights, but it is not not technically a packaged meta search and we don't believe that that is necessary because of the value of Israeli and and.
And the packaging of the flight and hotel.
And serving basically has the same need.
Great Thanks, Alex and thanks for that.
Thanks, Kevin.
Thank you and your next question comes from the line of Doug and Miss at J P. Morgan. Please go ahead. Your line is open.
Hey, this is <unk> on for Doug.
Thanks for taking the question.
But first of all of those on where you are on the rollout of the display advertisement and sponsored listings and do you have.
And you heard the feedback from advertisers or early results to share on those products and do you expect and meaningful revenue contribution from these products. This year and the second question is around.
And you talked about a more granular approach to brand marketing and strategy could you elaborate on that a little bit and where you're seeing demand coming back from markets for you.
And that has started to rollout the vaccine.
Sure Yeah on the on the.
The new <unk> product family the CPA, the display ads and sponsored listings.
We have by now on board and more than 100 and advertisers evolve.
And and that is that's basically where the focus is right now because there is very little traffic. So so it's difficult for advertisers to test on a meaningful basis. It's also difficult.
For us to optimize ride and also on boarding and and giving access and making sure that everybody is prepared for higher volumes later in the year as is the key focus on and we do expect those products to be important for the different advertiser segments too.
And to recover as well as they can and to position themselves well for the recovery.
And how.
How great the share of the overall revenue will be to be honest. It is right now very difficult to predict but we do think that as I said, it's an important part of our.
The recovery on the on the revenue side.
And then on your second question.
The two questions and first part on the granularity of brand marketing and so what do we mean by that.
I mean, as I mentioned before when you do TV advertisement and linear TV advertisement.
That is and mass medium and you cannot.
Target audiences and.
And very granular way and so youll go broad and that works.
When.
The overall majority of your audience is ready and willing to travel if that's not the case and you have certain audiences that might be ready to Trevor but others are not then obviously, it's much more effective to just target debt audience and that you can can do and a more granular way with digital channel for exam.
If you think of online video and all.
Connected TV you can you can.
Target specific groups and.
And even <unk>.
Lookalike audiences.
And thats the level of granularity I am talking about.
On the second part.
Early signs.
And from from countries.
And then are progressing.
Well and the vaccination process.
I mean the.
And as I said before we do see early signs, but it is really early.
And it's not that we see a big uptick and terrific, but you do see that there is more interest.
So I am encouraged by that and would expect hence we would expect that debt the country.
Starts earlier to recover than other countries, where we are.
And so far behind.
If you look at the UK I mean, they also make make good progress but.
We have not seen yet.
Any any pickup and trailer demand.
And that might also be related to the fact that.
In Europe, there is not there and not a lot of places where you can go right now and also.
I mean local travel yes.
If you have that and a specific country and that might be possible. If you want to go.
And to other countries within Europe very difficult as the situation is very different everywhere right now as well.
Great. Thank you.
Thank you and your next question comes from the line of Brian Nowak at Morgan Stanley. Please go ahead. Your line is open.
Hi, This is Alex Wang on for Brian. Thanks for taking the question first.
First actually you mentioned the complementary nature of the local travel product and obviously you expect that launch and in next quarter, but can you give us a sense, how many markets that's being tested and right now which markets you are planning to rollout on and as you think about the user interface well the local piece.
From more of a default or how do you sort of put that next to the core travel search product guidance. It is today from a from a user interface perspective.
And then second question is more around sort of data capture previously had been on a journey in terms of trying to improve that but can you give us an update on initiatives youre working on to really improve.
And our data capture and in terms of personalization.
Logging rates and and things like that.
Okay, let's start with the first question so.
And the local travel product is is life and the first version, but we are planning.
Major second release.
And the quarter to come and that will be sequential so it will it will start and in some of our larger markets and then payroll.
Over the year to other large markets.
And.
In terms of.
How to integrate the product we will obviously test the best integration and the best way to to show the different products to our users, both and web and and the App, but.
Our current thinking is that it is a complementary.
And as I said before I mean, the core product is very much about you having made up your mind, whereas the local travel product is one step away from that you have made up your mind that you don't want to go far. So there is some decision and that already but you haven't made up your mind on where exactly to go and when exactly to go. So there is some uncertainty but also.
Some certainties and not too far away.
And so that's why why the starting point is as you as you can also see and the current.
It is it is basically complementing the core.
On side by side with different taps, but we will test different user interfaces and and.
And accept whatever works best we will take and iterative approach like with all of our product development.
On your on your second question, I mean, I'm not 100% sure that I fully understood. Your question. So if you could cut just.
Re price at that will be very helpful.
Yes, sorry, it was just around sort of any sort of backend infrastructure work on sort of and trying to improve the signal that you get on you.
And the users in terms of whether it's log and rates or other ways that you're thinking about strengthening your signal and to improve either personalization and curation on the app as we sort of come out of the.
And as things start to recover from a demand side.
Yeah, Okay. So so we.
We are very happy with our with our our data visibility and data tracking that we are having so we are confident that we have we have strong conversion.
Data and so you can use that to optimize.
Of course, we have all the logging that we have on our normal searches.
So for the local travel product. We think we are we are well prepared on the backend.
For our member area in particular, we have made a lot of progress and and and rolling out more fence rights and more and more special rights that we can show to our users and we have a pipeline of adding further unique and unique rates and and special rights into into.
Debt offering.
And there has been quite a bit of backend work that was required.
And and we think that we.
We have basically done the work and now need to work on on on boarding more providers of offense and special rights to that part of the overall product offering so.
Long story short I think on the back and we feel well prepared to offer.
To our users, while we want to offer to them and 2021.
Great. Thanks Axel.
Thank you and as a reminder, ladies and gentlemen, if you do want to ask a question. Please press star one on your telephone keypads and if you reached accounts of that request. Please press the husky.
There are currently no further questions on the line. Please continue.
Yeah.
Many thanks for taking the time to participate in today's earnings call and the months ahead, we do expect the situation to remain difficult both for us individually and for us as a business.
But.
There is clearly hope hope for a return to our normal life hope for a gradual recovery of the overall economic activity and hope to start to travel again, seeing friends and family and make new experiences where those that matter most to us stay safe and see you next quarter.
That does conclude the conference for today. Thank you for participating you may all disconnect.
[music].
Yes.
[music].
Okay.
And.
Yes.
[music].
Yes.
[music].
Yeah.
[music].
Yeah.
And.
Yeah.
Yes.
Yes.
[music].
Yes.
[music].
Yeah.
[music].
And.
Yes.
And.
Yeah.
[music].
And.
And then.
[music].
Okay.
Okay.
[music].
And.
[music].
Yes.
Okay.
And.
[music].
And.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
And.
Yes.
[music].
And.
And then.
[music].
Yes.
[music].
Okay.
[music].
Okay.
And.
[music].
And.
And then.
And.
Yes.
[music].
Okay.
Yes.
[music].
Okay.
Yeah.
Yes.
And.
Okay.
Okay.
Okay.
Okay.
Okay.
Good day, ladies and gentlemen, thank you for standing by and welcome to the Chewbacca Q4 earnings call 2020.
I must advise you. This call is being recorded today Wednesday, the 10th of February 2021.
To be joined on the courts day by acts, where he said <unk> CEO and managing director and.
And that's just Tillman Chewbacca, CFO and managing director.
The following discussion including responses to your questions reflects management's views as of today Wednesday February 10, 2020, <unk> line of me.
<unk> does not undertake any obligation to update or revise this information as always some of the statements made on today's call are forward looking typically preceded by words, such as we expect we believe we anticipate or similar statements.
Please refer to the Q4, 'twenty 'twenty operating and financial review and the company's other filings with the SEC for information and that fact.
And just which could cause <unk> actual results to differ materially from these forward looking statements.
You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in <unk> operating and financial review, which is posted on the company's IR website.
<unk> Dot com.
You are encouraged to periodically visit <unk> Investor Relations site.
Important content.
Finally, unless otherwise stated all comparisons on this call will be against results for the comparable period of 2019.
With that let me turn the call over to Jack So.
Good morning, everybody and welcome to our Q4 2020 earnings call.
It has been a year by now since we filed our Q4 earnings on February 11th 2020 and for the first time since we went public we did not give any specific guidance for that year and new virus had started to spread and parts of Asia.
Looking back I have to say that it was nothing like what we were anticipating a year ago. The collapse of global travel and March global Lockdowns that made the world's standstill strong local travel demand and summer and then the second wave that is hit so many countries and autumn the book.
Jordan off contact restrictions is wearing heavily on children families and the elderly.
However.
One year and Theres hope there is a clear path to and Odyssey and a lot of progress has been made.
Vaccines have been developed and record speed governments have supported citizens and businesses generously and vaccination programs are rolled out across many markets focusing on protecting the most vulnerable.
Looking forward, we do believe that everyday and every week is bringing us slowly but steadily closer to normalcy from now on some countries like Australia, China, and you've seen and half through a very strict measures already managed to return to and almost normal daily life, while countries like Israel and the UK and the U S are progressing rapidly.
Vaccination programs and should see gradual improvement and the second quarter.
Overall, we believe that by summer most major markets will have made significant progress to allow for local activities and travel and gives us citizens relief and time to relax after a very long and difficult period.
Like in the summer 2020, we believe that there will be very strong demand for local travel and perhaps even international travel and we continue to prepare for that moment.
And as a basic need and we believe it will come back as soon as the pandemic is under control.
For the first half of 2021 and this means that we will continue to focus on adapting and improving our value proposition towards our users and advertisers.
Our key focus areas will be new feature development and improvement of our core product.
The further development and rollout of our local travel product and.
Adjusting our marketing mix and communication to the current situation.
Rolling out our new advertising facing products to prepare for recovery and.
To keep morale up and continue to invest and to developing and strengthening our team.
With that and I'll hand over to <unk>.
Thank you Alex and good morning, everyone.
We normally experience a decline and travel activity and the fourth quarter as we are coming out of the peak summer holiday season, and the northern Hemisphere Q.
Q4, 2020 has not been different and.
In fact, the sequential seasonal decline and our segment developed Europe was more pronounced compared to prior year.
As most of our core markets and that segment implemented new lockdown measures and.
Excluding new travel restrictions to contain the spread of the virus.
Consequently, we reduced our marketing activities, even more than we usually do and the fourth quarter to preserve our cash.
On the other hand for countries that entered the peak summer season, like Australia, or Brazil, we observed a sequential increase and qualified referrals and this led to a substantial improvement and the year over year qualified referral decreases and those countries.
And for our segment Americas overall.
However, overall booking volumes were still significantly below 2019 levels, we continue to be cautious with our marketing activities and focus on high quality traffic.
The reduction in marketing and operating expenses led to a decrease of overall cost and expenses by 71% and the fourth quarter compared to the same period and 2019.
Excluding advertising expenses operational expenses, including share based compensation decreased by $18 million or 37% year over year.
As a result of the restructuring that we announced during the summer.
Hence we were able to limit the net loss to $8 6 million and our adjusted EBITDA to minus $3 4 million compared to a net income and adjusted EBITDA.
$3 1 million and $18 $4 million, respectively, and the same period of 2019.
Looking at the full year, we were able to maintain our total cash and short term investment position at around 228 million without taking on any additional external funding and we continue to be debt free.
It shows how quickly we can adapt to sudden and very unfavorable changes in our industry. We remain confident that we have the right setup for what remains a challenging and.
Unpredictable foreseeable future.
Globally, the number of new Covid cases increased again during the fourth quarter and new variance of the virus have emerged they tend to spread faster and.
Consequently, most of our core markets have implemented new mobility restrictions and particularly in Europe that were extended into the new year.
For example, Germany first extended and extended the lockdown until the 10th of January and then until mid February and the government is currently discussing two extended further into March.
And overall qualified referral growth rates have declined again in January.
However, there are regional differences and developed Europe qualified referrals were down around 80% year over year in January.
And to put that in perspective and April last year. When similar restrictions were implemented during the first wave our qualified referrals declined by over 90% and that segment year over year.
At the same time, we are observing an increase and the booking window and Europe with the average booking window being no more than 10 weeks.
And Americas qualified referrals were down more than 50% and January year over year down slightly more than in the fourth quarter as the year over year qualified referral decline and Latin America increased a bit again, whereas we see stable trends and the U S.
Looking at our segment rest of World overall qualified referrals a year over year net negative growth rates have been stable and January compared to the fourth quarter.
When looking at the year over year growth rates. Please keep in mind that our business started to deteriorate in February 2020, when the virus spread to Europe and Americas. So for the coming months, we need to take the comp effect into account.
Moving on to marketplace dynamics, and all three segments, while monetization is still down significantly year over year on a revenue per qualified referral has declined by a rate that was stable sequentially and the fourth quarter and we see this continuing in 2021 so far.
As a result on a global referral revenue, which is the product of qualified referrals and revenue per qualified referrals.
Client by a rate that was slightly higher and January compared to the fourth quarter due to the qualified referral dynamics and the different segments that I just described.
As the <unk> situation remains volatile and we continue to have only limited visibility we will not give specific guidance for 2021 at this point.
And we focus on what we can control and for the first quarter. This means that we will be debt, we will continue to be cautious with our marketing activities.
As mentioned before we have we have sustainably reduce our operating expenses. However, as the second wave of new Covid infections has emerged and overall booking volumes remained muted we expect our adjusted EBITDA and the first quarter to be more negative than in the fourth quarter.
Overall, we remain confident that we have set up the company for this change and environment and continue to be optimistic, but travel will recover and the second half of this year.
With that let's open the line for questions.
Operator, we're now ready to take the first question. Please.
And as I said, a reminder, ladies and gentlemen, and star one if you would like to ask a question on the first.
First question comes from the line of <unk> Khan at choice.
Securities. Please go ahead your line is open.
Yeah, Thanks, and I'll just add a couple of questions. So maybe can you give us some.
Some more color on the trends.
And he is on North America, and how does it compare to Europe for the fourth quarter. If I look on the volume of qualified referrals.
On North America.
It was essentially flat with Q3 and two for Europe.
Europe, obviously saw a pretty strong declines and maybe just speak to that and then secondarily, if I think about and be the back half of 2021 and the recovery how should we be thinking about your average spending.
On starts to come back.
And and you're spending went into that.
Sure things and have it.
And so on your first question trends in North America versus Europe.
I mean, I guess, some specific numbers for the QR growth rates and January already.
And would add the following.
Qualified referrals will obviously depend on the overall travel demand and on marketing spend going forward, but what we what we see and generally sulfur is that the trend is stable and the U S and.
And obviously as I said and Europe.
It's no surprise that.
We do not see a change in January so far given that.
Most countries started to implement new travel restrictions already in November.
And that has continued in December.
And now going into the new year.
So and.
And overall as I said, 80% down year over year and.
And Europe, so slightly better than what we saw on April 2020, when we first put restriction and too.
Let me throw a travel restriction and put into place by governments.
And America.
I mean.
As I said the U S stable.
And what we do see some encouraging signs.
And that is obviously correlated.
And that obviously, but something you could expect to the progress on the vaccination. So when you look globally, we called out Israel and the U K and Europe, where we do see that these countries are making progress and.
And if you look outside of Europe, Youll see that in the U S.
And you are progressing faster than in most other European countries and there we do see some positive signs and.
Total performance marketing channels, but still on a very low level.
And.
But it is encouraging to see and.
I would expect debt.
If we continue on that path that the situation will go.
Get gradually better.
And.
On on your second question.
And how to think about.
The marketing spend.
I mean as a general comment right now as I said in Q1, we are cautious which means we do not spend a lot on brand marketing.
Given that and that channel Youll.
Youll pay big time, usually spreads although.
And the months and quarters.
And so when you do that obviously it is expensive and you do want to be sure that there is enough demand and debt with tenants that we have at hand that you can run effective components.
There I think it's too early at this point and we don't see debt right now and you should not expect us to spend.
And Q1.
And then for the rest of the year I mean Q2, the situation could get a bit better, but obviously, it's hard to tell.
There is a lot of uncertainty and we run a similar approach to last year. When we came out of the period in April and May where we stopped.
Altogether and every market and then clearly looked at the different markets with different strength trends, we were seeing and then decided literally week by week, where we think it makes sense to invest and then went into.
And two opportunities that came up so.
I mean, that's a similar approach we.
We envision right now for Q2, we are as we said a bit more optimistic about Q3.
And then we also planning.
Some digital campaigns, where obviously you have to do some work now you also have to invest into debt in terms of production costs et cetera.
So that you do commit some.
And some money, but we are optimistic that this will.
We'll pay off.
And then probably Q3 at the time when we when we win.
Do more and in terms of print marketing.
And lastly on performance marketing and that is straightforward.
We do have our ROI targets, we we do look at the competition and the auction and we look at pockets where.
And we can.
Invest and.
Overall.
Reacting to the situation.
And be more aggressive where we see it makes sense.
But for now being cautious keeping our cash together and.
And then we'll invest when we when we see them.
Positive signs.
Good morning, Thank you for that book.
So and then.
Next question comes from the line of James Lee from Mizuho Securities. Please go ahead. Your line is open.
James Lee Your line is open.
Thanks for taking my question.
Two here.
First on alternative accommodation and can you help us understand what the contribution is as a percentage of.
Qualified referrals here I think in the past you've mentioned about 20% and also any specific strength alternative competition that you can point out here and also second.
Last quarter, you guys talked about normalized activity and second half I was wondering you assumption stoping that case or are we pushing that.
And back a little bit here. Thanks.
Thank you James.
And we'll take your first question and then pass it onto Axa.
And so on and attuned to documentation.
We do not share.
And our mix of Commendation mix on a quarterly basis, we did provide a data point.
During summer, where we said for the first time and you mentioned that the share was above 20%.
And in General this has been a trend that we've seen for a while and that's why we went into the segment and a 2017 already and buildup of inventory.
And we have over $3 8 million units and.
And that segment.
And obviously that debt.
Obviously, but its something you could expect and we've seen debt.
And with the pandemic.
And.
And on the indexing of Citi trips.
And that segment.
And gained share and.
And in particular in July and August net was strong.
Reverse a little bit, but overall, if you look at the year over year. The share also on our platform is still higher than what we had was a year ago.
And I would not expect.
That that trend materially reversed from here, but yes I can.
And can give you a specific number.
But it's not that different from what we disclosed before.
On on your second question.
How have you on the second half has changed since the last earnings call. So on the positive view on the second half is basically.
Driven by the success of the vaccination programs plus plus the impact of the weather and summer weather and summer has not changed but on the the view on the vaccination programs. There. There are two key levers availability of vaccine and and the logistics already rolling out vaccination probe.
Grams with some new requirements that we have not seen before and particularly for the four day by on Tech vaccine and there the success in and particularly in Israel, but also in other countries is giving us more comfort and we had a quarter ago that.
And there will be a sustainable recovery and the second half and debt that's pretty much most of our large markets will have offered vaccines to the majority of the population by the second half of the year. So overall and more positive because of these new data points that we've now experience on the loss.
A couple of months.
And excellent just a follow up question I just wanted to ask a question about business philosophy right. Given this a lot of <unk>.
Pressure on meta search.
Bottom of funnel conversion.
Business at this point and time is the overarching goal for your company to diversify into more content and media.
Platform and moving Europe, maybe traffic to the upper a and the mid funnel and to monetize on that perspective.
And also relying just on driving conversion.
And <unk>.
So we.
Our historic strength that day at the bottom of the funnel. So so really the and the time before you want to make a booking to compare prices and by doing that we do believe we generate a lot of value to our users.
And of the new products that we are developing and that we have also acquired are obviously as you rightly say slightly further upper funnel. So they do have not only the conversion and element, but they also have and inspirational element.
And that's why we were also very very excited about the acquisition of weekend Dot com because the inspiration on product about local travel and where we combine ideas where to travel to plus the price comparison or is nicely complemented now through that acquisition, where we can offer packaged tours for city trips.
That are at a different use case and a different source of inspiration for our four weekend trips once the world has normalized.
Okay, great. Thanks.
Thank you and your next question comes from the line of Brian Fitzgerald of Wells Fargo. Please go ahead. Your line is open.
Thanks, guys I had a couple of questions you talked about the extension and the booking window and Europe. Some travelers are booking out this.
And the summer season, do you see travelers, making the assumption that they will be able to travel pretty broadly throughout Europe, maybe even beyond Europe.
Are you where do you see them still looking very closely at home as they did before.
And then I got one follow on after that.
Sure so on.
On the booking window.
Generally speaking our book and mineral tends to be relatively short and what I mean by that is that usually people are coming to all the upside.
With the intend to book something that is on average less than eight weeks out with some variations obviously between regions and countries.
Now the time to travel window has naturally increased in January and Europe as I mentioned as many European countries reinstated mobility restrictions, which makes last minute travel and travel obviously very difficult on not possible at all.
On the booking window is not increasing because we see a lot of pent up demand coming to the market for some of our bookings, but because of the fact that short term travel is not possible.
So I would argue that there is no significant shift and I believe that and most of all relevant segments people are holding back for now and in some service we have seen encouraging data like that people still have travel plans and want to go somewhere when it is possible again.
As we are coming closer to summer and AV and travel restrictions are being lifted we expect to see more of that pent up demand coming through that is currently being held back.
And then on the real quick the.
A wrinkle to that was do you are you seeing them I get the booking window extending or are you seeing people, though look for are they broadly thinking they could.
Extend travel a little broader throughout Europe or are they still.
Natural locations closer to home.
So that's a bit too early to tell but our expectation is that as much as I said, there will be very strong demands to get a break coming out off.
The lockdowns.
And that's that the most natural starting point for that demand will be clearly local.
For Continental travel it will depend on.
A bit more on the relative progress of the vaccination programs, because you will need to have made progress and the and the source market and the destination market to have that these travel bubble. So so that is.
On possible for certain Paris, part, but it's not as as certain and Intercontinental travel. We believe will be would be very very slow to recover this year.
So and in a way we are we are we have to stay flexible and and react quickly, but we are preparing for a very strong local.
Recovery and possible continental recovery.
Got it and then the.
Second question was and the letter you talked about some of the consumer viewership shifting from linear to digital channels at a high level thought on the kind of pricing of ROE as you were seeing and some of the digital brand channels connected TV.
Versus what you've seen historically and linear TV.
Yes.
Obviously, I cannot talk about exact pricing et cetera, and.
Let me, let me start with saying that TV will continue to play an important important role and olive rent mark to marketing mix them.
But and.
Viewership is declining and particular among younger audiences is stellar and mass medium and very and a very effective channel for us and particularly on <unk>.
Cpm's et cetera, So we have tested a connected TV and other channel in the past and it.
It's not like for like comparable and.
And as I mentioned here.
Can be more granular with those channels and in particular, what we want to do because.
And in the recovery phase.
And people will not return at all at the same but might return at different points in time.
So in some markets TV might not be the most effective channel.
When the recovery starts and.
And we might want to use digital channel first or in addition to traditional TV advertisement.
And I appreciate it thanks guys.
Thank you.
And your next question comes from the line <unk> line of Lloyd.
<unk> at Deutsche Bank. Please go ahead your line is open.
Alright, Thanks, guys two questions first just when you look at the shift to CPA based bidding.
Do you think this is a permanent shift or do you think we revert to kind of CPC based bidding.
After the pandemic over and and I guess thinking about this.
This impair monetization, we don't get credit for kind of trial and and branding benefits. The otas get from from the traffic or do you think you'll be able to get full value of that.
Versus what you were getting pre pandemic and and I guess a related question would just be.
Can you kind of elaborate a bit more on some of the changes you've flagged around different.
<unk> views on on cancellation rates and the volatility and the auction.
Yeah.
Sure on on the rollout of the CPA I mean, it is not it's not and you ask from our advertisers so even before the pandemic there wasn't particularly from the smaller advertisers and.
Our strong desire to basically outsource a conversion risk and the full bidding technology and intelligence to us and so that's why we believe that the development effort that we put into the product well will be will have a lasting benefit for a certain segment.
The what is what has opened as all of us.
Whether it's some of the larger advertisers that have now moved to CPA will.
And then move back to on CPC bidding to be able to.
To incorporate some strategic thoughts that they would not necessarily share with us for us to incorporate and our algorithm and and incorporate that directly into the CPC EBIT.
But yes.
Yes.
So that's unclear, but overall, we believe the product will stay.
And the experiences that we've made so far are positive. So we do believe that we can offer a greater efficiency both to our partners and also to our marketplace by taking over the the bidding for them.
And so yeah. So that's also positive.
The second question on the volatility and the.
And the marketplace.
The overall situation is quite volatile to be honest assay, if you're adjusting back to and November there was.
And sudden re emphasis and off of restrictions, which led to two and a.
And media drop and activities.
There was a time.
And in the end of Q4, where you had quite a bit of activity for example to the Canary Islands and out of the UK out of Germany that stopped basically from from one day to the other.
And you have very very different reactions to these kind of changes some advertisers basically react immediately.
And and and drop their bids very quickly assuming very high cancellation rates other.
Take a bit more time and use more ultimate ultimate isms and Theyre biddings. So given that they are these events that debt significantly changed the cancellations and the short short term and debt you have very very different.
And tactics to react that obviously makes the overall marketplace more volatile having said that debt the more stable. The outlook is and right now the outlook is relatively speaking stable the lesser of an award that is for us.
Alright, guys.
And there's cross for a better second half environment. Good luck.
Thank you.
Thank you and your next question comes from the line of Kevin.
Kevin Kopelman at Cowen and company. Please go ahead your line is open.
Great. Thank you so much.
And I had a couple of questions and first one just a quick.
Quick follow up on the U S.
You mentioned that it was it was relatively stable and January can you clarify is that on a year over year basis and was.
Is that because typically in January and would you see.
Seasonal uptick and kind of planning and and.
Traffic on the site.
Sure. Thanks, Kevin.
So yes, my comment referred to.
The development being stable sequentially and so when you when you look at the.
Qualified.
Referrals grew.
Growth rates in the fourth quarter.
And that was that was stable in January and.
So obviously, we only disclose the segment Americas.
But I made some comments earlier and last quarter.
And it gives you some idea about the U S and there.
And we did see in January.
Year over year qualified referral growth rates.
Stable.
And obviously Sydney.
And significantly lower than January 2020, as I said.
And the situations that we're still pre pandemic and then only in March.
So things deteriorating and the U S.
From a traffic perspective.
Got it and is there is there a seasonal just a regular seasonal uptake in terms of just.
And you look at the January patterns on a Q over Q basis on.
Month over month.
And that's implicit in there so the growth rate is stable.
You had the seasonal effect in January last year. So then you'll have it also this year.
Alright, great and I had one other question.
Could you talk a little bit more you touched on it earlier, but on.
Could you talk to us about the weekend Dot Com acquisition, and just give us a little more color on.
On a weekend dot com and and the business model for for that site and how it compares maybe how it compares to.
Existing Chicago, and just to give us a bearish on for that.
Sure. So so the one thing that the pandemic has and.
And I won't impact. The pandemic has had is that there is less certainty and so less certainty way can travel.
And what to expect and and how to return and that that will persist from our perspective for some time so in particular for.
For easier to reach destination short trips, we do believe that there is a need for more inspiration.
And.
And Thats why we have developed our local travel product and that's also why we acquired weekend telecom. So we do believe that as a complementary service to our users.
Whenever they have not made up their mind already which is where our core product is very strong and need some inspiration to to offer suggestions of great destinations and then also great dates.
And went to travel there by plane to get a good price for.
For the plane and the hotel combination.
And that's where we're also the positioning is and the target segment is similar our users do want to save money and are price conscious and the weekend on Com offers you exactly the same inspiration for trips.
At the best possible price.
And so it is complementary.
And it's not a price.
On the factor it is the price comparison, because it's dynamically packaging hotels and.
And and.
And slides, but it is not not technically a packaged meta search and we don't believe that that is necessary because the value is really and.
And the packaging of the flight and hotel.
And serving basically has the same need.
Great Thanks, Alex and thanks for that.
Thanks, Kevin.
Thank you and your next question comes from the line of Doug and Mr. J P. Morgan. Please go ahead. Your line is open.
Hey, this is Danny on for Doug Thanks for taking the question.
But first of all is on where you are on the rollout of the display advertisement and on sort of this thing and do you have.
And the feedback from advertisers or early results to share on those product and do you expect and meaningful revenue contribution from these products. This year and a second question is around.
And you talked a lot and more granular approach to brand and marketing strategy could you elaborate on that a little bit and <unk>.
Are you seeing demand coming back from markets for you.
That has started to rollout the vaccine.
Sure Yeah on the on.
And the new B to B product family the CPA, the display ads and sponsored listings.
We have by now on board and more than 100 advertisers evolve.
And and that is that's basically where the focus is right now because there is very little traffic. So so it's difficult for advertisers to test on a meaningful basis. It's also difficult for us to optimize ride and also on boarding and giving access and making sure that everybody is prepared for higher volumes later.
And the year as is the key focus on and we do expect those products to be important for the different advertiser segments too.
To recover as well as they can and to position themselves well for the recovery.
And how how great the share of the overall revenue will be to be honest. It is right now very difficult to predict but we do think that as I said, it's an important part of our.
The recovery on the on the revenue side.
And then on your second question.
The two questions and first part on the granularity of brand marketing and so what do we mean by that.
I mean, as I mentioned before when you do TV advertisement and linear TV advertisement.
That is and mass medium and you cannot.
Target audiences and.
And very granular way and so youll go broad and that works.
When.
The overall majority of your audience is ready and willing to travel and if that.
It's not the case and you have certain audiences that might be ready to Trevor but others are not then obviously, it's much more effective to just target debt audience and that you can can do and a more granular way with the introduction and.
For example, if you think of online video.
On our connected TV and you can you can.
<unk> specific groups and.
And even.
Lookalike audiences.
And that's the level of granularity on.
Talking about.
And on the second part.
Early signs.
And from from countries.
And then are progressing.
Well and the vaccination process.
I mean, the U S. I said before we do see early signs, but it is really early.
And it's not that we see a big uptick and terrific, but you do see that there is more interest.
So I'm encouraged by that and would expect and would expect that debt the country starts.
Start earlier to recover than other countries, where we are.
Still far behind.
And you look at the UK I mean, they also make make good progress but.
That we have not seen yet.
Any any pickup and travel demand.
And that might also be related to the fact that.
In Europe, there is not there and not a lot of places where you can go right now and also.
I mean local travel yes.
If you have that and the specific countries and that might be possible. If you want to go.
Two other countries within Europe very difficult as the situation is very different everywhere right now as well.
Great. Thank you.
Thank you and your next question comes from the line of Brian Nowak Morgan Stanley. Please go ahead. Your line is open.
Hi, This is Alex Wang on for Brian Thanks for taking the question.
First actually you mentioned the complementary nature of the local travel product and obviously you expect that launch and in next quarter, but can you give us a sense.
How many markets, that's being tested and right now which markets you are planning to rollout on and as you think about the user interface well the local piece become more of a default or how do you sort of put that next to the core travel search product as it is today from a from a user interface perspective.
And then second question is more around sort of data capture and perhaps you had been on a journey in terms of trying to improve that but can you give us an update on initiatives you're working on to really improve.
And our data capture and in terms of personalization.
Logging rates and and things like that.
Okay, let's start with the first question so.
And the local travel product is is life and the first version, but we are planning.
Major second release.
And the quarter to come and that will be sequential so it will it will start and in some of our larger markets and then payroll.
Over the year to other large markets.
And.
In terms of.
How to integrate the product we will obviously test the best integration and the best way to to show the different products to our users both and web and in the App, but.
Our current thinking is that it is a complementary.
And as I said before I mean, the core product is very much about you having made up your mind, whereas the local travel product is one step away from that you have made up your mind that you don't want to go far. So there is some decision and that already but you haven't made up your mind on where exactly to go and when exactly to go. So there is some uncertainty but also.
Some certainties and not too far away.
And so that's why why the starting point is.
As you can also see and the current debt.
It is it is basically complementing the core.
Side by side with different taps, but we will test different user interfaces and and accept whatever works best we will take and enter it took approach like with all of our product development.
On your on your second question, I mean, I'm, not 100% short and I fully understood. Your question. So if you could could just.
Re price that will be very helpful.
Yes, sorry, it was just around sort of any sort of backend infrastructure work on trying to improve the signal that you get on the.
And the users in terms of whether it's log and rates or other ways that you're thinking about strengthening your signal and to improve either personalization and curation on the app as we sort of come out of the.
And as things start to recover from a demand side.
Yeah, Okay. So so we.
We are very happy with our with our our data visibility.
And then and data tracking that we are having so we are confident that we have we have strong conversion.
Data and so you can use that to optimize.
Of course, we have all the logging that we have on our normal searches.
So for the local travel product. We think we are we are well prepared on the backend.
For our member area in particular, we have made a lot of progress and and and rolling out more fence rights and more and more special rights that we can show to our users and we have a pipeline of adding further unique and unique rates and and special rights into into.
That offering.
And there has been quite a bit of backend work that was required.
And and we think that we.
We have basically done the work and now need to work on on on boarding more providers of offense and special rights to that part of the overall product offering so.
Long story short I think on the back and we feel well prepared to offer.
And to our users, while we want to offer to them and 2021.
Great. Thanks Axel.
Thank you and as a further reminder, ladies and gentlemen, if you do want to ask a question. Please press star one on your telephone keypad. If you reached accounts of that request. Please press the husky.
There are currently no further questions on the line. Please continue.
Many thanks for taking the time to participate in today's earnings call and the months ahead, we do expect the situation to remain difficult both for us individually and for us as a business.
But.
There is clearly help and hope for a return to our normal life hope for a gradual recovery of the overall economic activity and hope to start to travel again, seeing friends and family and make new experiences where those that matter most to us stay safe and see you next quarter.