Q2 2021 Tripadvisor Inc Earnings Call

August 6, 2021

[music].

Good morning, and welcome to the Tripadvisor second quarter 2021 earnings Conference call.

On today's conference call is being recorded at this time I would like to turn the conference over to Tripadvisor, Vice President of Investor Relations. Mr will Lyons. Please go ahead.

Thanks Valerie.

Good morning, everyone and welcome to our call. Joining me today are Tripadvisor CEO, Steve Kaufer, and our CFO Ernst kind of thing.

Last night after market close we distributed and filed our second quarter 2021 earnings release and made available our shareholder shareholder letter on our Investor Relations website and the release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call on our Investor Relations website, you will find supplemental financial information, which also.

Reconciliations of certain non-GAAP financial measures discussed on this call as well as well as other metrics.

Before we begin I'd like to remind you that this call may contain estimates and other forward looking statements that represent management's views as of today August 6.2021, Tripadvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to <unk>.

Materially from these forward looking statements.

And now with that I'll pass the call to Steve.

Thank you will and good morning, everyone. Thanks for joining us today.

Covered and our shareholder letter you were pleased to report that Q2 grew by 91% versus Q1 on <unk>.

Net loss narrowed and adjusted EBITDA turned positive.

Monthly unique users and revenue as a percentage of 2019 levels improved each month throughout the quarter.

Whereas last quarter, we saw strength predominantly in the U S market and Q2, we saw the recovery.

Broaden and particularly in Europe.

These results indicate that the recovery is well underway and that Tripadvisor is positioned well.

The traffic and revenue improved in July versus June and while we are mindful of the variance and their potential impacts on travel and the high percentage of domestic travel and we remain optimistic about the second half.

The year and 2022.

When the recovery broadens, both urban and international and travel return and full.

Well, we were pleased with how we are successfully navigated and recovery.

Tripadvisor story remains much more than just getting past COVID-19.

And we see a huge opportunity to drive long term growth and delivering more value to consumers and partners on our platform.

We have and will continue to position the business for future growth by leveraging Tripadvisor has global scale influence and competitive strengths to execute on our strategic growth initiatives.

This includes building our direct to consumer subscription offering tripadvisor surplus, which we rolled out to all U S users and the quarter.

We will continue to invest and our product offerings, our tech and our go to market strategies in order to deliver customers the best experiences possible and drive diverse growth across our platform.

So in summary, Q2 had many encouraging developments.

I want to thank tripadvisor employees for their passion and commitment to helping hundreds of millions of consumers and partners get back to travel.

To our loyal customers and partners, we will keep building on our products and services to drive more value to you and I remain very optimistic about what's ahead.

And with that Ernst let me turn it over to you for some additional thoughts.

Thank you, Steve and good morning, everyone. Our Q2 results were beyond our expectations and the progression of traffic and revenue improvements versus 2019 levels throughout the quarter is very encouraging.

Increased case counts and other challenges posed by the pandemic the near term uncertainty on the pace of the ongoing travel and recovery of course. However, we expect another positive step forward and Q3, our expectation is that Q3 revenue.

As well as adjusted EBITDA will meaningfully improve versus Q2, both in absolute dollar terms.

But also as a percentage of 2019, driven primarily by further improvement in Europe.

In summary, uncertainty uncertainty remains but we believe the industry has entered a return to travel period and.

This will release of a significant pent up demand that we've already seen will.

Continue to expect a better second half rebound and are optimistic about further significant travel recovery into 2022, and this has already been demonstrated in terms of demand for domestic travel primarily and the U S and we expect international travel as well as Europe and the rest of the world to follow closely behind.

We believe we are positioning tripadvisor well for not only a strong recovery, but for the long run.

With that we will now open the call for questions.

Thank you, ladies and gentlemen, if you'd like to ask a question. Please press Star then 1 on your Touchstone telephone and again, if he would like to ask a question. Please press Star then 1.

1 moment please.

Our first question comes from the lead kind of choice. Your line is open.

Yes.

Yeah. Thanks, a lot a couple of questions from me.

And maybe just on the on your commentary about our.

Q3 and how.

July saw further improvement from June on the.

Based on that from whom are snowed, maybe you can just.

And the dog, whereas between U S versus Europe are you seeing.

The continued improvement and more in Europe and.

You are sort of like dining or improvement continuing across both the market.

And then I have a follow up question on Tripadvisor from us.

Yeah.

I know that this is ernst.

Yes, we've seen.

July improved from June levels in terms of percentage of 2019.

The rate of improvement slowed.

And to June as you saw on our numbers was a pretty significant step up as a percentage of.

2019, but we saw continued progress.

If you go underneath that and we saw Europe.

Starting to increase more significantly.

Early in the quarter as its been primarily the U S.

We saw on the hotel side, the auction and maybe take a little bit of a step back and July relative.

Relative to junior debt, it's been only a few points.

But our experiences and dining business continued to accelerate to July and so overall our July numbers 19 were actually a little better than June, but not as much better as may to June.

And then that's helpful.

And that provides a plus.

And live.

And you start from a month and a half now.

Available to anyone.

Maybe any any color and commentary on the on the update that you might have seen.

And it's gonna be much tenants to full launch.

And your own expectations.

And also maybe just on the usage do you see and primary use case being that people who become subscribers surplus.

I'll use it right away or is that with the lag or is it a percentage of that do not end up using it and then and just that.

Can you speak to that.

Sure thing.

And the VW sleep topic, I I'd love to talk about.

And I got to start with the it is very early days, but I have to say I think we're really onto something here.

Mentioned before we have plenty of examples of fantastic subscription businesses, and a bunch of other categories, but but not yet and travel and so.

And with our traffic on brand Trust and you think Chris but it's just just the ideal company to create a really affordable play and that splits everyone as we say.

They will travel.

We just launched a product a couple of months ago and the U S. So so the question I guess, you're asking like what did we learned so far.

I will but I'd say the biggest thing apps.

Absolutely above our expectations is that we're saving a lot of money for travelers. The average savings is an impressive $315 with theres. Some bookings every single day that are saving a traveler over a thousand dollars, that's pretty amazing stuff from use of discounts that hotels are passing along towards our <unk>.

And they're just like.

That's a great value proposition traveler state and $99 previous privilege to be able to get all these discounts.

And as a matter of fact, we're testing and expansion.

Into our experiences booking flow and not just the hotel booking flow because we really wanted to kind of expand the offering as you know we have discounts on not only hotels and experiences and we want to leverage all the traffic to help people and more travelers take advantage of these savings.

But to be fair no product launches without some hitches and <unk>.

So oil and excited about the traveler savings exceeding our expectations.

To be candid, we haven't made as much progress signing big change so I would've hoped.

But hey, we are great and listening weighted iterating and improving and so we've taken to hurt some of the feedback that we've heard from our hotel chain partners and believe we have a solution that will be much more in line with their goals and that wont hurt the great value proposition that we've created for travelers.

Unfortunately, right now and not ready to announce anything, but we're getting a much better reception from chains to the changes that we're making to the product and that that's a critical part of building. This 2 sided marketplace.

As you know we signed a couple of other.

Hotel chains, we're excited about that and we've also partnered with Chris Dot Com, specifically around plus and we're working closely with them to bring all of their supply and they have a lot into the plus ecosystem.

In terms of the question on kind of our users booking right away and I'd say most users are seeing.

In the flow of booking their hotel and they are seeing that they can save money if they subscribe kind of along the way and that's.

That's the no brainer, a moment that we had talked about in prior calls pointing out that the savings.

And that you make on this particular booking can more than pay for the subscription not all like that but that's certainly.

Certainly most.

Got it.

Thank you Ernst.

And thank you Steve.

Thanks.

Thank you. Our next question comes from a sweat on Georgia and Evercore ISI. Your line is open.

Oh I'm on.

On your part on your and signing up more hotel chain.

And you mentioned and the letter that has evolved and new ways to communicate and hotel discounts and.

And and slightly differently and that's been more and that's been well received.

And what was it what was the change and how has the reception been so far.

From large exchange that that's the first question and on the second 1 also on Tripadvisor plus.

Is the supply side and on.

On boarding a slower than expected process in general is that a product.

And development focus for you and in terms of once let's say on hotel says Okay. We are on board what is the process like until discounts start showing up.

Okay.

Yes.

Sure. So I'd say that the biggest challenge some properties have had with our current implementation.

It's along the topic of <unk>.

Rate parity, where we're showing a discounted rate and and hotels care a lot about.

And having a standard rate across the internet and so we've heard that loud and clear.

And so as I say.

Just mentioned, we're making some changes that we think are.

Goes a long way towards addressing those changes and and hopefully you will.

And those come to fruition and the next few months.

As in live on the site and offering our offering and the opportunity for more and more hotel chains to join in.

To be clear with.

Partners like Chris Dot Com, they have already a lot of inventory.

And that is going to make a big difference we believe on the supply equation for 4 plus.

And it comes to your question about asking individual hotels to signed up currently ask for a.

Is kind of the zero commission rate or a discounted rate that we can then show our travelers there is some.

Hi.

There is some more for the hotel you are to go create that rate. So that we can show the savings that's what Ernst the hoteliers, a higher position on our site and gets them more bookings because we're certainly referencing are hotels that are better deals for the consumer and that's always what the cause.

Tumors interested and so.

And we think with.

Some of the new things that we have under the covers we can actually even make that sign up process simpler and again it will have a.

A bunch more to say on that.

The next time, we chat.

Okay. Thanks, Steve.

Thank you.

Thank you. Our next question comes from Jason Bazinet Citi. Your line is open.

I'm, sorry, just the labor plus but 2 quick questions.

It's fair to say that that 350 savings you talked about what.

And weird way, what we'd want to see over time is that savings number come down.

Because it implies sort of deeper penetration and more receptivity to do you know.

And for the consumer or am I thinking about that wrong, and then second if there been any sort of.

Impediments in terms of signing up hotel property owners.

Because of Covid, where they just look at you and they say you know demand is so strong we don't really need any help at this particular moment because sort of everyone wants to get out and travel.

And things get a little bit easier sort of as the world goes back to normal or is that.

Not a fair characterization of the types of discussions you're having.

So 2 terrific questions Jason.

And so I E.

If I had to project out over several years.

As we look to build more and more properties that will have some level of discounts that we can share pass back to the travelers.

Yes, I would expect that overall savings on average to come down, but I think of that as more because we're building hopefully building a habit with consumers that they are coming back to us to not only book that.

Thousand dollar trip, but now that theyre getting the savings from an entire year theyre coming back to book the $200 Triple net and.

And that property and may not have a great discount on it but it may have a good discount on it and of course, it's a lower overall spend so they literally that traveler may and saved $150 on the first purchase a nice discount on the big ticket and is going to save $25 on the second purchase because it's a 1 day.

Day at at a module will be priced hotel travelers happy about that they were building more loyalty, we using our product over and over again coming to us first because they were able to find that.

And that discount on more and more inventory.

But you just do the math and it was $150 savings on the first time in 25 dollar savings and the second time, and that's going to be bringing your your average down.

I, absolutely believe that we will always have.

A set of properties and pretty much every market that will have tremendous savings on them because theres always just and the hotel distribution industry. There is always a set of great properties that could use some extra demand and serve.

And points and time and you know tripadvisor.

Has the opportunity to be a great channel to distribute those rooms on the incremental basis too.

Yours.

So your second question on Covid impacting signing hotels.

Yes, but.

I think it probably has but for a slightly different reason and I think then and what you had shared.

We're happy to sign hotels at a variety of discount levels our message is simply.

The higher discount that you signed with us the higher the more.

More visibility you're going to get on our side, but you can also start with a discount that is similar or even less than what you wrote their distribution channels and with.

They're paying to other distribution channels and so it.

It will be hotel, even if they have a lot of demand would always prefer to Oh a.

They were to get bookings direct but then when they go to alternate channels.

Like it to be the most cost efficient for them and we think we can help do that for the hoteliers.

Reason why I think COVID-19 is impacting our.

Ability to sign to some degree is simply being able to reach people are whether.

Whether the hotels and I'll come back to full staff or whether they are really focused on making sure their hotel is safe for gas or perhaps stealing.

I'm sure. There are some cases, where they are sold out and just don't want to kind of bother signing a new channel.

But I think it's probably more of that there is still just getting back on their feet and growing their business glue.

Globally.

All of which.

Very solvable it comes back to as travel recovers hotels are always going to be looking for alternative distribution opportunities.

Our model, where a cheaper channel 4 hotels are very flexible channel for hotels. So like the the reaction when we talk to individual hoteliers will for groups.

Has always been very positive, it's just been a matter of time and some and sometimes connectivity issues in terms of getting them all live on the site.

Super helpful. Thank you.

You bet.

Thank you. Our next question comes from Deepak methods on them at Wolfe Research. Your line is open.

Hey, guys. Thanks for taking the question on just a couple ones. So first wanted to ask about the auction are you seeing mix of advertisers different and now ways pre COVID-19 in terms of revenue contribution or smaller advertisers hotel tortillas and now leveraging the platform more effectively than some of your larger.

Customers are from before and then second 1 on plus you know you have 1 large oh Dear right now on the platform. What do you think it takes to bring some of the other large otas to Tripadvisor plus anything you can share there would be great.

I will take the first 1 out.

And through the second.

Not really not really a change and advertiser mix.

And as pre pandemic that you can discern at this point, so nothing really to call to call out in terms of on trend.

Steve.

So unplugged and we certainly are.

Have a lot of experience going back quite a few years with our.

Instant booking initiative, bringing lots of aggregators all around the globe onto the platform.

It takes time.

In fact some of the.

New product direction pieces that I alluded to actually Fortunately for us get to reuse some of the instant book infrastructure that we had in place and and have kept lives. So.

I do think over time, you will see some additional.

Aggregators or otas as part of the equation.

But they're not kind of from our perspective and not critical.

To have we have a pretty good supply footprint now with Chris Dot com coming on line and their global reach.

From our perspective.

Yeah.

Well, it's always nice as we surface and offer.

To a consumer will be able to take amongst kind of the best discounts for a particular property.

It's actually a little less interesting from a consumer perspective, because our goal is to always be surfacing offers that are better than the retail rate that is out there and so on.

Hi.

Whether we have.

5 or 10 otas to choose from and surfacing a particular offer is less important than having a good offer and as I've said the supply footprint from Chris Dot Com, just the sheer number of properties debt.

And that are available on their platform is really quite impressive so.

We will continue to pursue.

Additional aggregators traditional otas, but we don't view it as kind of critical to the success of the Bronx.

Okay that makes sense. Thanks, Steve Thanks, John.

Thank you. Our next question comes from Richard Clarke from Bernstein. Your line is open.

Hi, Good morning, guys. Thanks for taking my questions on a couple of if I may 1st 1 just on on Viator, obviously, a bright spot of the of the quarter and.

And maybe you can just talk about what is the potential for that kind of b to b side of I've experiences and maybe putting that in context of the deal you've done with booking how big can that be what Google is doing and that space and and.

And how can you kind of.

Rectify that again.

Using tripadvisor as the sort of top of the funnel for that and is there any any conflict there and just 1 question on the trip plus looks like you've softened the language and little bit used to talk about it potentially being a multibillion dollar product and now you are saying you can get a share of a multibillion dollar market is that because you're seeing from copycat products coming in.

Or is this just a sort of am I reading too much into that change of change in language.

Hey, Richard I'll take the first question.

Very pleased with our performance and experiences.

Very pleased and particular with the performance of our Viator point of sale we.

We have see experiences is a category come back much faster than we anticipated in Q2.

And.

We anticipated that the lack of international travel that we've historically benefited from with experiences would slow down and the recovery, but what we've seen is we've been very effective.

And repositioning our offer towards more domestic particularly U S domestic but now more recently Europe and.

And away from Big city to outside of the city and that's been very very effective for us very very strong our U S bookings on our U S point of sale.

Across experiences all channels Tripadvisor and viator.

The bookings were above 2019, and June very very strong even and the absence of big cities opening or really Europe opening significantly cancellation rates are still a little bit elevated, but theyre lower than last year.

But very very strong performance.

<unk> as a channel.

Actually overall globally was.

With our bookings above 2019 in June which is very very impressive and its improved again and in July and so.

Really doing well as you know, it's a huge market.

It's still early days and 80% is still offline.

We're a market leader, we have very very strong global supply.

And we feel that we have.

And as we've always done a real shot to win and experiences and we're doubling down on that now and the recovery.

So very very important we play that among along 3 different channels, we have <unk>, which is a pure play okay.

Consumer, but also on Otas and.

And we have Tripadvisor is a channel tripadvisor.

Which is much more integrated with the overall travel travel planning and overall travel experiences on Tripadvisor and.

And then we have third parties that myself and which is the smaller channel of the of the 3 that I'm up on them.

And we have signed up and indeed, the likes of booking but many many other third party partners.

Leveraging the strength that we have and supply.

To broaden the impact we can have on the industry. So all 3 of those channels, we believe are well positioned.

And all are leveraging this.

Just really superior global access to 2 pretty amazing tours and attractions debt.

And our that our consumers love So we're pretty pleased with where we're going with us.

Yeah. This is Steve to add on just a 1 sentence or 2 on <unk>.

Comments I think of all of that supply that we've gathered that we've perfected that we're able to merchandise and now we want to know where are all the consumers that crude wants it and you've got that pure play O T. A named by toward Dot com growing like a weed look and fantastic Tripadvisor already has a ton and people planning their entire.

Our trip to a destination of which experiences as a key part so great. We have that piece of the funnel and then for the folks that aren't on our sites. We have this amazing third party program with the likes of Expedia and booking and and most of the other big names that can capture travelers who will offer our wares.

Travelers, who are not part of our own ecosystem, all of which benefits and a 2 sided marketplace like like experiences are all of which benefits the supplier because it's more bookings, which in turn helps everyone achieved.

All the things you get and.

And when you're the biggest player and town.

So quite excited about our experiences is.

The question on on.

Plus.

And then.

And did the language soft and no not at all it's like I started.

I'm I'm more excited about plus every week that goes by.

To put it simply we literally have millions of travelers looking at hotels on our site every single day.

You can call it a 100 million a month and normal times.

We've described on these calls the hungry and $60 million I think we call. It shots on goal as in $160 million Hotel meta search clicks in 'twenty and.

2019 for stays that were of significance and I called that at $750 or more so it's 160 million people interested and clicking through a partner site because they're interested in buying a hotel room and such.

And 50.750 being the number that kind of makes this a pretty easy purchase that will.

To add another 100 million travelers.

A month looking at experiences.

That's a lot of reach and influence and of course Tripadvisor overall has even more traffic on that.

But that 200 millions of accounts hotels, we're looking and experience and those are the 2 categories that plus plays and right now so it's a small fraction of those travelers sign up each month for our subscription product because they know they're going to save money on these hundreds of thousands of hotels and hundreds of thousands and attractions we end up at.

Adding millions of subscribers over the next few years with that same longer term opportunity and the tens of millions so again we.

And think it's.

Super interesting space with Tripadvisor to occupy fits extremely well with our.

Our focus on guidance leveraging the traffic we have the brand trust, we have and kind of the things that people will already know tripadvisor before and now we and reducing the subscription product again proven and so many other categories.

And and we believe this is the next big thing and travel.

Thanks, a lot of sense, thanks very much.

Thanks.

Thank you and next question comes from Mario Lu with Barclays. Your line is open.

Great. Thanks for taking the questions I asked here on plus.

And I believe currently are you still mainly offering this description as a no brainer division and they will pay for itself after the first booking.

But I believe before you mentioned the notion of potentially offering a free trial.

Curious if that's still on the works to potentially on more and more members and I have a follow up.

Sure I, yes, we have done some pre trial programs and I'm sure. We will continue to do some more we're learning how to market a subscription product.

As its our first 1.

I think it's a great.

Opportunity.

We've chosen not to go.

Broad as in our entire audience with a free trial.

And we don't think that makes sense at this point for for our partners.

But I.

Hi.

Go back to my statement that it's very early days and you feel with our audience reach we have a lot of different ways that we can talk to them. We have literally hundreds of millions of members the product still rolled out just to the United States. So far.

And so whether it's a.

Free trial, a bundle better job, putting it and the experiences flow more marketing and across the site.

Changing how we merchandise plus so that.

And I think right now with if you're going to save at least $75 working on.

Put it front and center, we can play with that number up or down and there's just lots of different ways that we are essentially iterating on every month as we look for the the.

The magic Formula that that helps us GAAP.

Great. That's helpful. And then I know, it's still early but for members that have been using plus for a few quarters.

Can you provide some color in terms of the magnitude and their bookings frequency and plus a number versus their historical patterns.

Okay.

Oh well that's.

So again early days.

Really hard for us to look at a 6 month cohort at this point given that and data to a small percentage of our traffic and Q1.

And it and it's always just hard for us to compare with that booking behavior would be compared to what that customer does otherwise. So we can see how it compares visits on our site and a stronger repeat that sort of thing but.

But I'm not sure that that's telling us enough right now so you know candidly in my view, that's going to be a great question, where we're going to have a lot more interesting data on.

And 3 months and 6 months, then and we do right now but.

Rest assured we're looking at that sort of stuff.

Got it thank you.

Our next question comes on and same thing and to do and how are your line is open.

Great. Thanks for taking my questions I, just have a follow up on trip Dot Com agreement that you guys have.

And I think the O T. A have most of the hotel inventory and international markets. Just wanted to check on that and also is the discount from the old T. A available all season orders and need to be negotiated between you and trip dot com. After the on boarding process or is it and automated with the OTT can enter.

And the system real time thanks.

And.

Yeah.

I I don't want to give too much color on the specifics of the contract but know that.

And we look at the size of their inventory, there and we interest in and sort of helping facilitate bookings to our global audience.

And given the size of our global audience and.

Amount of inventories they have there's not going to be anything manual about about the whole process. So.

And we aim to scale.

We have experience working with.

Otas and bringing breadth of inventory on board to Tripadvisor.

And our sort of past lives and trip dotcom, it's distributed their inventories and the players as well so.

Again, I think it's a.

A pretty good match the.

On a trip dotcom has global inventories it literally tons of hotels and every single country and the world is.

Historically, Chris Dot Com has served more outbound travel from China, but with their app.

Acquisitions, they've established and much more global footprint of travelers as well and so you.

You know that.

No 1 supplier will ever.

Offer the complete set of inventories that we're looking to build the trip Dot Com is is absolutely a key and trusted partner in helping us bring plus 2.

Not only more hotels across the U S more hotels across the world.

But over time, more hotels, and and more languages to serve more markets.

And 1 quick follow up Steve any from a consumer's perspective relating to trip plus any tweaks to your membership benefits as you continue to learn from the consumer behavior. Thanks.

Oh, and I have nothing to announce now but.

Yeah, absolutely, we expect to be adding more benefits overtime.

We have done on flight club, we have hertz to pretty compelling benefits and will.

We see plenty of opportunity to add more in the years to come.

And what <unk>.

No 1 subscriber and a travel club is going to use all of the benefits. So there'll be additional thing that you add that ends up getting used as another reason why that individual is going to be sure to renew and in addition to the savings on the hotels and experiences that will.

And we already offer so.

We're looking ahead towards renewal opportunities and want to make sure that every share plus subscriber is is getting value on the things we offer and things that our partners can offer.

Great. Thank you.

Thank you there are no further questions at this time on trying to call back over to Steve Kaufer.

Terrific.

Thank you everyone for joining the call.

Travel a recovery is underway we will.

<unk> executing our long term focus strategy to drive meaningful value in the years to come.

A big Thank you to all of our employees as well as to Tripadvisor customers worldwide and a b.

Thank you to our shareholders for their shared beliefs that tripadvisor can play a key role and shaping travel in the years ahead.

Please get your vaccines and stay safe and I look forward to updating everyone on our progress next quarter. Thanks.

Thanks Al.

Ladies and gentlemen, and does that conclude today's conference. Thank you all participating you may all disconnect.

Great day.

[music].

Good morning, and welcome to the Tripadvisor second quarter 2021 earnings conference call.

As a reminder, today's conference call is being recorded.

This time I would like to turn accomplished over the Tripadvisor Vice President of Investor Relations. Mr will Lyons. Please go ahead.

Thanks, Valerie and good.

Good morning, everyone and welcome to our call joining me today are Tripadvisor CEO, Steve Kaufer, and our CFO Ernst.

It also includes reconciliations of certain non-GAAP financial measures discussed on this call as well as well as other metrics.

Materially from these forward looking statements.

And now with that I'll pass the call to Steve.

Thank you will and good morning, everyone. Thanks for joining us today.

Covered and our shareholder letter you were pleased to report that Q2 grew by 91% versus Q1, our net loss narrowed and adjusted EBITDA turned positive.

Monthly unique users and revenue as a percentage of 2019 levels improved each month throughout the quarter.

Whereas last quarter, we saw strength predominantly in the U S market and Q2, we saw the recovery.

Broad and particularly in Europe.

These results indicate that the recovery is well underway and that Tripadvisor is positioned well.

The year and 2022.

When the recovery broadens as both urban and international travel return installed.

While we are pleased with how we are successfully navigated and the recovery.

Tripadvisor story remains much more than just getting past COVID-19.

And we see a huge opportunity to drive long term growth and delivering more value to consumers and partners on our platform.

We have and will continue to position the business for future growth by leveraging Tripadvisor has global scale influence and competitive strengths to execute on our strategic growth initiatives.

And this includes building our direct to consumer subscription offering and Tripadvisor, plus which we rolled out to all U S users and the quarter.

We will continue to invest and our product offerings, our tech and I will grow the market strategies in order to deliver customers the best experiences possible and drive diverse growth across our platform.

So in summary, Q2 had many encouraging developments I want to thank tripadvisor employees for their passion and commitment to helping hundreds of millions of consumers and partners get back to travel.

To our loyal customers and partners, we will keep building on our products and services to drive more value to you and I remain very optimistic about what's ahead.

And with that Ernst let me turn it over to you for some additional thoughts.

Thank you, Steve and good morning, everyone Q2 results were beyond our expectations and the progression on traffic and revenue improvements versus 2019 levels throughout the quarter is very encouraging.

Greece case, count and other challenges posed by the pandemic as near term uncertainty based on the ongoing travel and recovery of course, however, we expect another positive step forward and Q3.

Our expectation is that Q3 revenue as well as adjusted EBITDA will meaningfully improve versus Q2, both in absolute dollar terms.

But also as a percentage of 2019, driven primarily by further improvement in Europe.

In summary, uncertainty uncertainty remains but we believe the industry has entered a return to travel period and.

This will release of a significant pent up demand that we've already seen.

And we expect international travel as well as Europe, and the rest of the world to follow closely behind.

We believe we are positioning tripadvisor well for not only a strong recovery, but for the long run with.

With that we will now open the call for questions.

Thank you, ladies and gentlemen, if you'd like to ask a question and please press Star then 1 on your Touchtone telephone and again, if he would like to ask a question. Please press Star then 1.

1 on Italy.

Our first question comes from and that would be kind of Choi Your line is open.

Yeah. Thanks, a lot a couple of questions from me.

And maybe just on the on your commentary about Q3 and how.

On July saw further improvement from June on the face of that and go more slowly.

Maybe can you parse and a dog, whereas between U S versus Europe are you seeing.

The continued improvement and more in Europe and.

U S sort of like dining orders improvement continuing across both the markets.

And then I have a follow up question on Tripadvisor and stuff.

I know that this is ernst.

Yes, we've seen.

July improved from June levels in terms of percentage of 2019.

And the rate of improvement slowed.

To June as you saw on our numbers was a pretty significant step up as a percentage of.

2019, but we saw continued progress.

If you go underneath that we saw Europe.

Starting to increase more significantly.

We're early on the quarter it had been primarily the U S.

And we saw on the hotel side, the auction, maybe take a little bit of a step back and July realm.

Relative to junior debt and only a few points.

But our experiences and dining business continued to accelerate in July and so overall our July numbers. So 19 were actually a little better than June, but not as much better as maybe Jill.

And then that's helpful.

And supervisor plus.

And live.

And you start a month and a half now.

Available to anyone.

Any any color and commentary on the on the uptake that you might have seen.

And it's going to be most tenants that will launch.

And your own expectations.

And also maybe just on the usage do you see and primary use case being that people who become subscribers plus.

I'll use it right away or is that with the lag or is that a percentage of that do not end up using it and then and just that.

Let me speak to that.

Sure thing.

And the VW sleep topic, I I'd love to talk about.

And I got to start with the it is very early days, but I have to say I think we're really onto something here.

Mentioned before we have plenty of examples of fantastic subscription businesses, and a bunch of other categories, but but not yet and travel and so.

And with our traffic on brand Trust and you think Chris Buzz and there's just the ideal company to create a really affordable play and that's with everyone as we say.

They will travel.

No. We just launched a couple of months ago and the U S. So and so the question I guess, you're asking like what did we learned so far.

I will the I'd say the biggest thing apps.

Absolutely above our expectations is that we're saving a lot of money for travelers. The average savings. It's an impressive $315 with you know there are some bookings every single day that are saving a traveler over a thousand dollars, that's pretty amazing stuff from user discounts that hotels are passing along toward our try.

And they're just like that.

And that's a great value proposition traveler state and $99 previous privilege to be able to get all these discounts.

And as a matter of fact, we're testing and expansion.

And into our experiences booking flow and not just the hotel booking flow because we really wanted to kind of expand the offering as you know we have discounts on not only hotels, but experiences and we want to leverage all the traffic to help even more travelers take advantage of these savings.

But to be fair no product launches without some hitches.

And so while and excited about the traveler savings exceeding our expectations.

And to be candid, we haven't made as much progress signing big change so I would've hoped.

As you know we signed a couple of other.

In terms of the pushing on kind of our users booking right away I would say most users are seeing.

In the flow of booking their hotel they are seeing that they can save money if they subscribe kind of along the way and that's it.

That's the no brainer moment, but will you talked about in prior calls pointing out that the savings.

And that you make on this particular booking can more than pay for the subscription not all like that but that's certainly.

Certainly most.

Got it.

Thank you John.

And thank you Steve.

Thanks.

Thank you and our next question comes from a sweater jewelry and Evercore ISI. Your line is open.

And on.

On your part on your and.

Signing up more hotel chain.

Possibly you mentioned and the letter that is involved and new ways to communicate hotel discounts.

And and slightly differently and that's been more but that's been well received so I guess what was it what was the change and.

And how has the reception been so far.

From large exchange that's that's the first question and on the second 1 also on Tripadvisor plus.

Is the supply side and on boarding a slower than expected process in general is that a product.

On development focus for you and in terms of once let's say on hotel says Okay. We are on board what is the process like until discounts start showing up.

Sure. So I'd say that the biggest challenge some properties have had with third party implementation is.

And it's along the topic of Oh, great parity, where we're showing a discounted rate and and hotels are care a lot about Ah Ah Ah Ah.

And having a standard rate across the internet and so we've heard that loud and clear and.

So as I say.

And so you just mentioned, we're making some changes that we think are good.

Goes a long way towards addressing those changes and and hopefully you will see.

See those come to fruition and the next few months.

As in live on the site and offering our offering the opportunity for more and more hotel chains to join in.

To be clear with.

Partners like Chris Dot Com, they have already a lot of inventory.

And that is going to make a big difference we believe on the supply equation for 4 plus.

And it comes to your question about asking individual hotels to sign up we currently ask for a.

Is kind of the zero commission rate or a discounted rate that we can then show our travelers there is some.

Hi.

Hotels that are better deals for the consumer and that's always what the consumers interested in so.

So we think with.

Some of the new things that we have under the covers we can actually even make that sign up process simpler and again it will have a bunch more to say on that.

The next slide we chat.

Okay. Thanks, Steve.

Thank you.

Thank you. Our next question comes from Jason Bazinet Citi. Your line is open.

Sorry to belabor surplus, but 2 quick questions.

It's fair to say that that 350 savings you talked about what and weird way, what we'd want to see over time is that savings number come down.

Because it implies sort of deeper penetration and more receptivity to that.

And for the consumer or am I thinking about that wrong, and then second if there been any sort of.

Impediments in terms of signing up hotels property owners.

Because of Covid, where they just look at you and they say you know demand is so strong we don't really need any help at this particular moment because sort of everyone wants to get out and travel.

And things get a little bit easier sort of as the world goes back to normal or is that not a fair characterization of the types of discussions you're having.

So 2 terrific questions, Jason Hi.

So I got it.

If I had to project out over several years as we look to build more and more properties that will have some level of discounts that we can share pass back to the travelers yes.

<unk> thousand dollars trip, but now that theyre getting the savings for an entire year theyre coming back to book the $200 Triple net and that property and may not have a great discount on it but it may have looked good discount on it and of course, it's a lower overall spend so they literally that traveler may and save.

The $150 on the first purchase a nice discount on the big ticket and is going to save $25 on the second purchase because it's a 1 day to day at at a moderately priced hotel travelers happy about that day.

We're building more loyalty reusing our product over and over again coming to us first because they were able to find debt.

And that discount on more and more inventory.

But you just do the math and it was $150 savings on the first time 25 dollar savings and the second time, and that's going to be bringing your your average down.

I, absolutely believe that we will always have a set of properties and pretty much every market that will have tremendous savings on them because theres always just and the hotel distribution industry. There is always a set of great properties that could use some extra demand at certain point.

And time and Tripadvisor.

Tripadvisor is.

Has the opportunity to be a great channel to distribute those rooms on a day incremental basis too.

Yes.

So your second question on Covid impacting signing hotels.

Yes, but.

I think it probably has but for a slightly different reason and I think then and what you had shared.

We're happy to sign hotels at a variety of discount levels our message is simply.

The higher discount that you signed with us the higher.

More visibility you are going to get and on our site, but you can also start with a discount that is similar or even less than what you were at their distribution channels and then wait.

They are paying to other distribution channels and so there.

It will be hotel, even if they have a lot of demand would always prefer to oh, a they were to get bookings direct but then when they go to alternate channels. They would like it to be the most cost efficient for them and we think we can help do that for the hoteliers.

And why I think COVID-19 is impacting our.

Ability to sign to some degree is simply being able to reach people.

And whether the hotels and I'll come back to full staff or whether they are really focused on making sure their hotel is safe for gas or perhaps stealing.

I'm sure. There are some cases, where they are sold out and just don't want to kind of bothers, signing a new channel.

But I think it's probably more of that there is still just getting back on their feet and growing their business globally.

Globally.

All of which.

Very solvable it comes back to.

As travel recovers hotels or always going to be looking for alternative distribution opportunities for our model, where a cheaper channel 4 hotels are very flexible channel 4 hotels. So like the the reaction when we talk to individual hoteliers will grow.

Groups.

Has always been very positive, it's just been a matter of time and some and sometimes you know connectivity issues in terms of getting them all live on the site.

Super helpful. Thank you.

You bet.

Thank you. Our next question comes from Deepak method that and of Wolfe Research. Your line is open.

Thank you Bob I will take the first 1 out.

Steve answer the second.

Not really not really a change and advertiser mix.

Pre pandemic that we can discern at this point, so nothing really to call to call out in terms of on trend.

Steve.

So unplugged and we certainly.

Have a lot of experience going back quite a few years with our.

Instant booking initiatives, bringing lots of aggregators all around the globe onto the platform.

It takes time.

And in fact some of the.

New product direction pieces that I alluded to actually Fortunately for us get to reuse some of the instant book infrastructure that we had in place and and.

And have kept lives so.

I do think over time, you will see some additional aggregators or otas as part of the equation.

But they're not kind of from our perspective and not critical.

To have we have a pretty good supply footprint now with trip com coming on line and their global reach.

From our perspective.

Yeah.

Well, it's always nice as we surface and offer.

To a consumer will be able to pick amongst kind of the best discounts for a particular property.

It's actually a little less interesting from a consumer perspective, because our goal is to always be surfacing offers that are better than the retail rate that is out there and so on.

Hi.

Whether we have.

5 or 10 otas to choose from and surfacing.

Particular offer is less important than having a good offer and as I've said the supply footprint from Chris Dot Com, just the sheer number of properties that.

And that are available on their platform is really quite impressive so.

We will continue to pursue.

Additional aggregators traditional otas, but we don't view it as kind of critical to the success of the Bronx.

Okay that makes sense, thanks, Steve Thanks Ernst.

Thank you. Our next question comes from Richard Clarke from Bernstein. Your line is open.

Hi, Good morning, guys. Thanks for taking my questions. A couple if I may 1st 1 just on on Viator, obviously, a bright spot of the of the quarter and.

And maybe you can just talk about what is the potential for that kind of b to b side of of experiences and maybe putting that in context of the deal you've done with booking how big can that be what Google is doing and that space and how can you kind of rectify.

Rectify that again.

Or is this just to sort of a am I reading too much into that change of change of language.

Hey, Richard I will take the first question.

Very pleased with our performance and experiences.

Very pleased and particular with the performance of our Viator point of sale we.

We have see experiences is a category come back much faster than we anticipated in Q2.

And.

We anticipated that the lack of international travel that we've historically benefited from with experiences would slow down and the recovery, but what we've seen is we've been very effective and repositioning our offer towards more domestic particularly U S domestic but now more recently Europe and.

And away from Big city to outside of the city and that's been very very effective for us very very strong our U S bookings on our U S point of sale.

Quest experiences all channels Tripadvisor and viator.

Very very strong performance.

Viator as the channel.

Actually overall globally.

And with our bookings above 2019 in June which is very very impressive and it improved again in July and so.

Really doing well as you know, it's a huge market.

It's still early days, 80% is still offline.

We're a market leader, we have very very strong global supply.

And we feel that we have.

As we've always done a real shot to win and experiences and we're doubling down on that now and the recovery.

So very very important we play that among along 3 different channels, we have viator, which is a pure play out yet.

Our consumer but also on OTI and.

And we have Tripadvisor is a channel tripadvisor.

Which is much more integrated with the overall travel travel planning and overall travel experiences on Tripadvisor.

And then we have third parties that we sell to and which is the smaller channel of the of the 3 that I'm up on them.

And we have signed up indeed, the likes of booking but many many other third party partners.

Leveraging the strength that we have and supply.

To broaden the impact we can have on the industry. So all 3 of those channels, we believe are well positioned and on.

And all are leveraging.

And really superior global access to pretty amazing tours and attractions.

And that our that our consumers love and so we're pretty pleased with where we're going with us.

Yeah. This is Steve debt add on just 1 sentence on.

<unk> comments.

Think of all of that supply that will gather that we've perfected that we're able to merchandise and now we want to know where are all the consumers that crude wants it and you've got that pure play O T. A.

<unk> dot com growing like a we'd look and fantastic Tripadvisor already has a ton and people planning their entire trip to a destination of which experiences as a key part so great. We have that piece of the funnel and then for the folks that aren't on our sites. We have this amazing third party program with the likes of expedient.

Booking and and most of the other big names that can capture travelers, who will offer our wares to travelers who are not part of.

Our own ecosystem.

All of which benefits and a 2 sided marketplace like like experiences are all of which benefits the supplier because it's more bookings, which in turn helps everyone achieved.

All the things you get.

When you're the biggest player and town.

So quite excited about our experiences business.

The question on on <unk>.

Plus.

Good day.

And the language soft and no not at all and so I started.

And I am I am more excited about plus every week that goes by.

To put it simply we literally have millions of travelers looking at hotels on our site every single day.

You can call it a 100 million a month and normal times.

Described on these calls the hungry and $60 million I think we call. It shots on goal as in $160 million of hotel meta search clicks and <unk> and.

2019 for stays that were of significance and I called that at $750 or more so it's a 160 million people interested and clicking to a partner site because they're interested in buying a hotel room and so from 50.750 being the number that kind of makes this a pretty.

You see purchase that will go out another hundred million travelers.

1 month looking at experiences.

That's a lot of reach and influence and of course, Tripadvisor overall and is even more traffic on that with that but that $200 million hotel and theyre looking experiences and those are the 2 categories that plus place and right now so it's a small fraction of those travelers sign up each month for our subscription product because they know that.

Save money on these hundreds of thousands of hotels hundreds of thousands and attractions, we end up adding millions of subscribers over the next few years with that same longer term opportunity and the tens of millions. So again, we think it's.

Super interesting space for Tripadvisor to occupy fits extremely well with our.

And we believe is the next big thing and travel.

Thanks, a lot of sense, thanks very much.

Thanks.

Thank you. Our next question comes from Mario Lu with Barclays. Your line is open.

Great. Thanks for taking the questions asked here on plus.

And I believe currently are you still mainly offering this description as a no brainer and division and they will pay for itself. After the first ducking.

But I believe before you mentioned the notion of potentially offering a free trial. So curious if that's still on the works to potentially on board more members and I have a follow up.

Sure.

Yes, we have done that.

Some pre trial programs and I'm sure we will continue to do so.

More and we're learning how to market a subscription product.

As its our first 1.

It's a great.

Opportunity.

And we've chosen not to go.

Broad as in our entire audience with a free trial.

We don't think that makes sense at this point for for our partners.

But.

Hi.

Go back to my statement that it's very early days, we feel with our audience reach we have a lot of different ways that we can talk to them. We have literally hundreds of millions of members the product still rolled out just to the United States. So far.

And so whether it's a.

Free trial of bundle better job, putting it and the experiences flow more and marketing across the site.

Changing how we merchandise plus so that.

And I think right now if you're going to save at least $75 work and Ah Ah.

Put it front and center, we can play with that number up or down and there's just lots of different ways that we are essentially iterating on every month as we look for the the.

The magic Formula that that helps us scale.

Great. That's helpful. And then I know, it's still early but for members that have been using plus for a few quarters.

Can you provide some color in terms of the magnitude and their bookings frequency band plus member versus their historical patterns.

Oh well that's.

But again early days.

It's really hard for us to look at a 6 month cohort at this point given that and data to a small percentage of our traffic and Q1.

But I'm not sure that that's telling us enough right now so you know candidly.

Candidly in my view, that's going to be a great question and where we're gonna have a lot more interesting data on.

And 3 months 6 months, then and we do right now but.

That's for sure and we're looking at that sort of stuff.

Got it thank you.

Thank you. Our next question comes on and same thing on the day.

Your line is open.

Great. Thanks for taking my questions I just have a follow up on chip Dotcom agreement that you guys have on I think the old Ta had most of the day hotel inventory and international markets. Just wanted to check on that and also is the discounts on the old T. A available all season orders and need to be negotiated between you and tripped on.

Comp after the on boarding process or is it on automated with the OTT can enter inventory into the system real time.

I I don't want to give too much color on the specifics of the contract but know that.

And you look at the size of their.

Inventory, there and we interest in and.

Sort of helping facilitate bookings to our global audience.

And given the size of our global audience and.

Amount of inventories they have there's not going to be anything manual about about the whole process. So.

We aim to scale.

We have experience working with.

Otas and bringing breadth of inventory on board to Tripadvisor.

And in our sort of past lives and trip Dot com, that's distributed their inventories and other players as well so again I think it is.

A pretty good match the trip.

Chris Dot Com has global inventories literally tons of hotels and every single country and the world is.

Historically crypt dotcom has served more outbound travel from China, but with their.

Acquisitions.

Established and much more global footprint of travelers as well and so.

No.

No 1 supplier will ever.

Offer the complete set of inventories that we're looking to build the trip dot com is.

It's absolutely a key and trusted partner in helping us bring plus 2.

Not only more hotels across the U S more hotels across the world.

But over time more hotels and and.

More languages to serve more markets.

And 1 quick follow up Steve any from a consumer's perspective relating to trip plus any tweaks to your membership benefits as you continue to learn from the consumer behavior. Thanks.

Oh, and I have nothing to announce now but.

Absolutely.

Expect to be adding more benefits overtime.

We have done on flight club, we have hertz to pretty compelling benefits and will.

We see plenty of opportunity to add more in the years to come.

No 1 subscriber and a travel club is going to use all of the benefits. So there'll be additional thing that you add that ends up getting used as another reason why that individual is going to be sure to renew and addition to the savings on the hotels and experiences that debt.

We already offer so.

We're looking ahead towards renewal opportunities and want to make sure that every trip plus subscriber is is getting value on the things we offer and things that our partners can offer.

Great. Thank you.

Thank you there are no further questions at this time I was trying to call back over to Steve Kaufer.

Terrific.

Thank you everyone for joining the call.

Travel a recovery is underway and we will.

Executing our long term focus strategy to drive meaningful value in the years to come.

A big Thank you to all of our employees as well as to Tripadvisor customers worldwide and the <unk>.

Thank you to our shareholders for their shared beliefs that tripadvisor can play a key role and shaping travel in the years ahead.

Please get your vaccines and stay safe and I look forward to updating everyone on our progress next quarter. Thanks.

Thanks Al.

Ladies and gentlemen, and does that conclude today's conference. Thank you all participating and you may all disconnect.

Great day.

Q2 2021 Tripadvisor Inc Earnings Call

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