Q1 2022 Tripadvisor Inc Earnings Call

Okay.

Yeah.

Good day, everyone. Thank you for standing by and welcome to the cheap advisor first quarter 'twenty to 'twenty two conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the Q&A you will need to press star one.

On your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

I will now hand, the conference over to your speaker today Ms. Angela White. Thank you Ma'am. Please go ahead.

Thank you Leslie good morning, everyone and welcome to Tripadvisor as the first quarter of 2022 financial results call. Joining me today are Steve Kaufer, CEO and Earth, Tennyson, CFO , and Chief Executive Vice where at the Florida and crews connect last night after market close we distributed and filed our earnings release and made available our shareholder letter on our Investor Relations website.

In the release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call also on our IR website, you will find supplemental financial information, which also includes reconciliations of certain non-GAAP financial measures discussed on this call as well as other metrics before we begin I'd like to remind you that this call may contain.

The estimates and other forward looking statements that represent management's views as of today may five 2020 to 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 differ materially from these four.

I was looking statements with that I'll turn the call over to Steve.

Thank you Angela and good morning, everyone. We just reported a great quarter and a solid start to the year.

We are certainly seeing benefits from the recovery and I am pleased with our continued execution I believe the tripadvisor is uniquely positioned as the world opens up again and I'm really proud of the role we play in helping travelers.

For so many this brand is about trusted advice.

Our community a spirit of adventure and with the travel industry in recovery mode. We're really excited about the year ahead.

Another reason for our excitement relates to the other announcement, we made last night, Matt Goldberg will join us as CEO starting in July as.

As you read in last night's release, his experience across multiple industries, and travel and digital media and advertising as well as his experience in strategy and the operations make him a really great fit for Tripadvisor, we look forward to introducing him to you on the next call and in the meantime, I personally look forward to bringing them up to speed on our amazing.

Business and helping them to hit the ground running.

On behalf of the entire Tripadvisor family, we welcome Matt to Tripadvisor.

With that let me turn it over to Ernst before we take your questions.

Thanks, Steve and thanks to everyone for joining I wanted to start off today by acknowledging that this will be Steve's last earnings call as our CEO most.

Most of you know that Steve founded Tripadvisor in 2000 above a pizza shop, and Needham, Massachusetts fast forward more than two decades later and Tripadvisor has grown to be an iconic brand and the most trusted travel website in the world, helping hundreds of millions of people plan and book there are perfect trip <unk>.

Tripadvisor has also proven to be an important economic enabler, helping millions of small businesses.

Thrive in the hospitality industry around the world.

Thank you Steve.

Half of all Tripadvisor employees for your leadership your integrity. Your optimism your passion has been such a pleasure and honor to work with you.

Now to our quarterly financial update.

We are very pleased to report our 2021st quarter results. This is indeed, a good start to the 2022 fiscal year.

As we.

The quarter that we saw sure signs that we have passed the omicron headwinds of January our revenue was 70% of 2019 levels for the quarter, but we exited march at over 80% of 2019, and we improved further in April .

Our hotels media <unk> platform business outperformed our internal expectations for the quarter our experiences in dining.

Business revenue crossed over 150% of 2019 levels in Q1.

With booking levels ahead of revenue and exited the quarter and into April at an even higher rate experiences in particular is growing very rapidly and ahead of schedule. We believe this reflects our strong position in our experiences <unk> dining marketplaces.

This quarter gives us confidence in the transition of leisure travel back to a full recovery and the benefit we expect to derive from that as Tripadvisor. We are also confident that the value we provide to our customers and partners has as well positioned as we move forward with our 2022 operating plan and our key investment areas, which should propel our future growth.

With that let's jump into Q&A.

As a reminder to ask a question you will need to press Star then the number one on your telephone keypad. If a question has been answered and you'd like to remove yourself from the queue press the pound key.

Our first question comes from the line of fractured Clark from Bernstein. Your line is now open.

Good morning, and just to reiterate <unk>, Steve Fendley.

And then suddenly Michigan, having you on the other end of the call and answering our questions and good luck going forward.

Thanks.

Maybe if I can just start off with the CEO appointment and maybe you can you can highlight your thoughts of what areas of his pass expertise.

They like going to be most beneficial to tripadvisor. The company you've found it it seems like he has come from.

Ed.

Sort of marketing background.

Is that kind of the key skills that you were thinking about and looking for the CEO of someone that could could sort of pursue those those display marketing ambitions and I went back in 2018, you talked about doubling those revenues or is it just sort of follow through on some of those ambitions.

Thanks, Richard for the kind words and the question Great question, I'm really happy with Matt as our selection camp cant wait for them to start and feel great about handing the reigns over to them what I really love came to love and appreciate it was really a number of things first I would say.

The breadth of experience not just at different companies in different roles like in one Guy you've got <unk>, you've got strategy significant M&A you spin a CLO like operate at different parts of the business EVP of North America.

Trade desk and of course being CEO at Lonely planet. So when you've had a lot of different roles at least in my opinion, you get to see all different aspects of the business up close.

The perspective that that provides I think is really helpful.

For the top job.

Second I'd say being CEO actually in this case it loomed planet you just have to make a ton of trade offs, while being responsible for the overall growth.

So.

Hi.

You can imagine we talked to a number of very accomplished individuals that had risen to do very well in their respective departments at some.

Very big companies.

But I felt mats.

Our ability to see the whole picture was actually more valuable than.

Our store player and a player that have either just on sales or just on products. So again.

Again, there's lots of different ways too.

To craft, what CEO is going to be great at but I like the breadth Chris.

The flow through is a complex business since having someone at the helm, who has had the experience of running the company before is just great not to have to kind of teach that on the job.

Let's see third.

He has got a real focus on building great teams the people the organization.

All of this job is paid a lot of attention to that and so we were certainly convinced that.

For business as complex as Tripadvisor building, the right teams to be able to deliver.

And getting the teams to work well together as they can that kind of it all makes for that.

That overall success.

And then finally.

He knows at least in my opinion, he knows what it's like to be a change agent and really help transform our business and I just love that type background Tripadvisor isn't a start up anymore.

But at the same time, our goal isn't to kind of eke out of five or 10% growth each year optimizing different parts of the business. Our opportunity is so much more than that we have the huge tam in front of us.

Huge number of assets and so on.

Matt.

Our belief that as he did at Loon, we plan to be able to take.

An existing company reached.

Reshape it to meet the needs of our future customers I have a ton of confidence in and then when you actually go down and look through his resume you see remarkable accomplishments at each and every job that talked about how he delivered the goods. So in our view, it's not not just.

The hand waving.

Talked about things, it's delivering results at very successful companies.

Thanks for that Steve I've heard lots of great color, maybe if I can ask just one quick follow up one of your peers was quite bullish about the impact of the digital markets Act coming in Europe I was just wondering what your perspective at all.

And whether you could see tripadvisor actually benefiting from the changes.

<unk> environment, that's happening in Europe .

Yes, I see a number of definite potential benefits.

Got to see how it all shakes out and when the appeals are done and all the rest of it.

And as I've stated many times before it.

It's hard to.

We choose not to craft a strategy around that versus take it as a as a tailwind if it.

If an emergence is good for us.

Great. Thanks very much.

<unk>.

Our next question comes from the line of Matthew Kahn from TUI Securities. Your line is now open.

Great. Thank you two questions. Please.

One on the <unk> side.

And within that if I look at the different pieces auctions versus display watches.

What kind of D&B.

And compare the performance versus what the.

For the Otas.

I think you guys would see.

Lagged in terms of recovery I think we're looking at Expedia talked about.

Alright.

Getting to a more positive and.

10%.

In April I wonder about the disconnect might be.

And if you could go into that is a trip length.

All business travelers tend not coming back what is it Asia.

Any color there would be helpful. And then the second question I have is on the E&P side how much.

The acceleration or the other clearly strong growth we're seeing here is driven by conversions.

What it says increase.

Increased traffic.

Any color would be helpful.

Hey, <unk> this is Ernst I'll kick off.

Well, Phil I am sure on <unk>.

So our total H M and P segment <unk>.

Recovered, 63% in 2000 in Q1.

That was 76% in March and then it was over 80% in.

In April .

If I unpack that the the business that has been recovering somewhat slower than the rest has been.

Our.

Hotel subscription business.

Our business to business.

Two hotels and two.

And two chains as well as our display so its moved a little slower than than the average it's partly because we are rebuilding our sales force at scale is also partly because this sort of upfront.

Relatively up funnel advertising by hotels has been lagging, but its been improving very very solidly.

But it's below the pace of the General Hotel recovery, if you look at our auction.

Our auction obviously suffered in January but then recovered quickly our auction was at seven.

76% of 2019 and March improved very substantially.

<unk>.

Then in April and was.

The larger that if you compare that to some of the otas.

I think one difference is our auction is almost purely hotel based whereas some of the Otas are reporting numbers, which include alternative lodging, which is not included with us and we believe alternative lodging.

<unk> is growing faster than recovering faster than than hotel. That's one component of it and of course, we have always skew to international travel, which we've seen.

May impact that as well, we have seen very robust recovery in the United States. So those are some of the puts and takes Steve I know if you want to add anything to that that's good.

E&E.

Yes phenomenal progress in E&E.

Both in restaurants and in experiences, but particularly the experiences E&E revenue.

Above 130% of 2019 in April .

Experiences more than 140% above 2019 in April as our estimated revenue.

Phenomenally doing phenomenally well.

<unk> experience is very U S based in 2021, but we've seen very robust recovery in Europe as well, we called out in the shareholder letter some.

Some great Factoids in April actually Europe , as a destination was as large as the U S. As a destination for experiences that is awesome very different from last year.

We also saw that U S travelers going to Europe , and doing experiences was above 2019 levels as well. So the business is just doing very well. It is partly improvements in conversion that we've made on the site as you were alluding to Nevada.

But it's also being very successful at attracting.

More traffic.

Both in paid channels isn't free channels.

And so most most of the indicators in this in this business are just doing superbly in the management team has done an awesome job in.

Making us grow.

Restaurants was already relatively strong even in 2020 in 'twenty, one that we keep making progress there as well very pleased with that.

With that as well and so if you take.

The two businesses combined experiences in dining.

Really the.

The fast grower in our portfolio at the moment and.

Is exceeding our expectations in this first quarter in April versus what we thought we would do and we were already quite ambitious with those businesses. So.

All around very pleased with that performance.

Thanks, that's very helpful and I wish you all the best Steve.

Thank you.

Our next question comes from the line of Jed Kelly with Oppenheimer. Your line is now open.

Hey.

Great great. Thanks for taking my questions just unpacking some of the strength youre seeing in experiences and as we think about you unlocking more value.

How would you think about a breakdown between the experiences coming through the bias toward brand and then the experiences that are being booked on tripadvisor and if you were to potentially IPO buyer tour with those experiences book Dot brand.

Tripadvisor what goes actually that revenue could go over to buy two or how should we think about that.

Yes excellent question.

Our shareholder letter actually has some has some explanation of what that would look like on a standalone basis, but let me take you through that so our experiences revenue consists of the viator point of sale. The Tripadvisor point of sale and then we have third party integrations and all.

All of that revenue.

If you were to separate out right or would be viator revenue.

We are for instance, the Tripadvisor point of sale all the revenue there will be vital revenue.

<unk> is the merchant of record for Tripadvisor experiences basically delivers.

The execution of all of that for Tripadvisor.

The Viator point of sale is by far the largest point of sale Tripadvisor second and the third parties sort of third in that.

If you were to separate them out we would recognize all the revenue of the Tripadvisor point of sale on <unk> as I, just said and we would cross charge and affiliate marketing fee.

To viator for that traffic, but the revenue would sit with with viator.

So that's where it was a part of your question was Hey, where are you in your in your thinking there for experiences.

We said in previous quarters that we for both provider and the fork were considering.

Ways of structuring it slightly different from from from today and carving them out more.

Said last quarter that we had filed confidentially.

Confidentially with the SEC for a sub IPO for.

<unk> the work is continuing.

And.

In the first quarter, obviously, we've had a.

Yes.

Market backdrop that is choppy, but we are continuing on our path of looking at all the options, including a sub IPO for a provider and we're just very very pleased with how the business is doing in the meantime.

Great. That's helpful and then just one more.

As we think about your direct marketing spend.

Over the balance of 'twenty two.

How should we think about your direct marketing.

Relative to your 2019 levels going forward. Thank you.

Yes, and so thats thats different for <unk> and E&E, So H M and P for our auction in particular, we have not changed.

Our rois levels will return on advertising spend levels compared to 2019.

And so there we have been successful at growing paid marketing.

Largely because our <unk> have been very favorable and so at higher <unk> in the same return on ad spend.

You can buy more traffic.

So thats been the impact there and we've seen a relative shift in 2021.

And into this first quarter within our hotel business to more paid as a result of that.

On the <unk> side, and particularly on experiences slightly different we have actually pushed harder on marketing than we did in 2019 in 2021 and now in the first quarter as well.

We are.

Working off of pretty good and consistent multi multiyear historical data on cohorts lifetime value of our customers and so we have compared to 2019, where we're investing relatively near term returns we've pushed that beyond the one year.

Payback period on the customers, but still profitable over a multiyear period.

That has been very very effective for us in increasing the volume. We can we can get from experiences combined with that what we have been able to do is with a very very strong focus on improvements that we have been driving through the pandemic, particularly on our vital point of sale, we have increased our convert.

Rates, we have increased our repeat rates so the cohorts of customers that we acquired in 2021.

Even at these elevated marketing expenditures have actually performed better than the cohorts.

2018, 2019 in terms of their repeat profile in the in the in the quarters after.

That is very very encouraging it means that not only where we write in spending what we're spending on acquiring these cohorts actually to do of course have outperformed how we how we thought they were so improving.

Conversion improving repeat.

<unk>.

More marketing spend but also diversifying our market channels beyond Google has been there has been an important focus and then lastly, the app. So we've spent.

Considerable effort in improving our app on viator still a ways to go but we've really seen the results in.

In traffic to the App and revenue we generate from the App. So.

Those are some of the of the core drivers of what's going on in our in our business.

Thank you good luck Steve.

Thank you.

Our next question comes from the line of Mario Lu with Barclays. Your line is now open.

Great. Thanks for taking the questions Steve Congrats on finding your successor, Matt seems like a perfect fit.

So the first question is on Viator and the Fork I appreciate the additional P&L detail in the shareholder letter so it looks like both businesses.

Operating negatively.

In terms of profit today.

But are there examples where you see pockets of profitability.

In more mature markets, just trying to get a sense of what long term margins could look like for these businesses.

And then separately.

Trip plus it wasn't really mentioned.

This quarter I was just wondering if theres any updates there.

Is it no longer focus for the company to drive future growth.

Hey, Mario I'll take the first question and Steve will take the second.

Yes, we are investing in these businesses they are as we say.

Loss, making on a standalone basis, if you were to break them out.

But we are investing significantly in growth in both of those assets that is people cost driving the product.

In the case of the Fork driving restaurant acquisition with Salesforce.

And importantly, we're investing marketing dollars against an LTV concept I have been talking about experiences. If you look at dining at our pork business you see the same thing we have significant repeat in that business.

And therefore value in a customers that we acquire.

As the business is growing you will see that we are operating on a marketing basis at a loss for future gains, which is all coming back later.

I've said in the past is that we expect for this segment for E&E.

We expect long term margins to be mid to high.

Percentage of EBITDA margin.

Mid to high <unk> percentage EBITDA margin.

And that applies to these individual businesses.

And so roughly similar similar measure.

The.

The.

Doug.

Gross margin for instance of the Fork.

And of our Viator are very very very robust.

90% ish.

Gross margin if you take out cost of sales.

<unk> for instance.

And so a very robust underlying gross margin profile currently spending on marketing and people cost to drive the growth.

But long term.

Tremendous amount of leverage in that business these businesses.

<unk>, it's an OTA business with very good take rates.

Mid <unk> type of.

Commissions that we get from from operators.

Which is a very robust.

Commissions to work with.

Is favorable compared to the hotel industry for instance, and we think long term that there is that business skills that can have very attractive margins. Indeed.

Thanks, Sir.

Thanks, Mario for the question and on trip plus it absolutely remains a focus for US we acknowledge before that we got out ahead of ourselves in terms of talking about it with such excitement before we'd actually prove in the product market fit and so we had to pull back and let's just say that.

While we continue to test and iterate you should expect us to be quieter on the topic until we're ready to kind of share the results, there's really no doubt that the.

In my mind that the concept of a travel subscription b, it's surrounding discounts or extra services.

There is a natural fit in the marketplace. The set of travelers that that we serve and theres lots of different ways to go about that product so to be crystal clear. It is an ongoing effort at Tripadvisor. We have plans, we released new things, we signed new deals.

So it is an ongoing effort and we will we.

We will share.

In a more.

Judicious manner going forward.

Thank you great. Thank you both.

Our next question comes from the line of James Lee with Mizuho Securities. Your line is now open.

Great. Thanks for taking my questions. Steve. Thank you for answering a question for many quarters. We wish you all the best now.

I've got two questions here, one maybe a little bit follow up plus two what you talk about last quarter.

Are you thinking about maybe making adjustments to your offering in light of the inflationary environment, how that may impact consumer spending I think you mentioned last quarter you were trying to resolve all the frictions for consumer are hesitating for.

Membership fee and also you talked about last quarter assessing kind of between instant discount versus rebate and just rang wondering have any update on that and my second question's regarding the auctions this as well.

When you're looking at your customer segments, specifically are you seeing hotelier customer coming back more aggressive versus wholesale direct booking wondering have any color. There and also maybe you can parse out looking at the revenue recovery for the auction business can you kind of breakout between volume versus pricing growth.

<unk>.

Sure. Thanks James.

I'll touch upon plus briefly.

We continue to iterate on both kind of the pieces of the value proposition that we're offering to travelers as well as different ways that we think we can sell it on the site and to our customers as well as through distribution channels. So those are all kind of ongoing we're keeping our options open in terms of disk.

Counts of rebates, there's pros and cons to each we've generally prefer the discount model but.

Im not saying that the rebates.

Our out of the question.

And then on auction I will turn it over to art.

Yes, we've seen in the recovery we saw it last.

Last year, and we see that as seen in Q1 is that the pricing levels to the.

<unk> effectively.

Have recovered ahead of volume.

That has been there has been.

There has been a very clear trend and continues to be so right now so.

So if you look at our revenue.

Healthy cpc's volumes still below 2019.

Levels and Thats, an indication that actually our auction is functioning very well that our partners, both otas and hotels.

Our bidding on our platform and we have a very healthy auction going on with very good price realization.

But volumes still are behind in the in the recovery.

Okay, and arent any distinct difference in terms of growth profile LTA versus to hotel direct booking any any segment, that's growing faster than the other.

No real trends to call out.

Okay, great. Thanks.

Our next question comes from the line of Deepak Mathew Blackman with Wolfe Research. Your line is now open.

Thanks, Zach on for Deepak just quickly on the <unk> guide, it's just hoping to get a little more color on the margins.

Revenues are approaching back to 2019 levels little below the margins are currently expected to be about 10 points below you have mentioned before reinvestment.

Definitely a lot of the cost savings back into the business, particularly on the <unk> side, but given the strong recovery over the past couple of months are you seeing incremental opportunities to reinvest is this primarily marketing or is there any kind of anything else that we should be aware of.

And then second just on the <unk> business.

You have given how late that the recovery kind of lagged other areas, but are you seeing any kind of promote sheets here and.

And should we expect this to kind of pick up a little bit in the back half or is this kind of more of a steady kind of a recovery over the course of the year.

Yes, Zach thanks for that.

With regards to Q2 and sort of margin. Yes, we are indeed guided for Q2, two and overall consolidated adjusted EBITDA margin.

Of approximately 20% of revenue.

We are.

Investing in E&E significantly that is marketing expenditure and building up some new capabilities in those areas as well oriented towards growth in 2022, but also importantly growth beyond there.

We've said in the past we.

<unk> saved in the during the pandemic about $200 million of fixed cost.

We're investing some of that back but the.

The majority of that is sticking someone's going back to inflation.

Cost to someone's going to.

Investment, particularly in E&E.

But the majority of it is.

He is staying on overall in the business.

But we have increased our marketing expenditures, specifically in E&E and Thats led us to.

To give the guidance for the for both segments for the whole year is to say that we're expecting significantly recovering EBITDA margins, both for <unk> and for E&E versus two versus 2021.

In the full year of 2022.

But for both segments, we don't expect it to be just quite yet at the EBITDA levels that we were in in 2019, but.

But importantly, improving in both in both segments.

Oh, sorry.

And then on the <unk> on the <unk> business. So.

I think there's a couple of factors going on there so for our media business for which we're very ambitious and some of the questions were asked before about our new CEO and his capabilities media is a business that is.

As a historical strong suit for Tripadvisor and has significant potential going forward, but it's been slower to recover than other parts of the business.

During the pandemic and now into the quarter.

Upper funnel marketing and and that's been slower to come back but we.

That to eventually recover and grow.

As we go back on the.

The direct to hotels business the subscription business.

Being found on Tripadvisor.

Advertising on Tripadvisor for those businesses on a subscription basis.

That business has been robust in the in the.

But because it's a subscription business robust in the.

Pandemic, but now that the market is coming back strongly in March April we see that business, improving but not as much as other parts of the business. That's two factors. One is we are rebuilding the sales force really out of the pandemic.

To be able to sell new subscriptions.

<unk> has a bit of a lag time, because you bring on new salespeople and they have to be trained up and then they have to start selling in.

And but that we believe by the end of the year, we will have the salesforce replenished and firing on all cylinders and that is a strong business that we have high ambitions for going forward as well.

The.

Both our hotel <unk> business and our media business were double digit growers from 2018 to 2019 significantly impacted by the pandemic, but strong businesses and we believe when they are back on there.

On the path they will continue to be growers for us.

Very helpful. Thank you best of luck.

Thank you.

Our next question comes from the line of John Koller ANTONE with Jefferies. Your line is now open.

Hey, Thanks for taking my questions I wanted to ask about sales and marketing disclosure for the A&D segment can.

Can you just give a bit more detail on how much of that line is.

Kind of the cost of boots on the ground versus traffic acquisition costs.

Given a lot of the business partners, probably turned over during the pandemic because of financial strain.

And I guess is the step up in sales and marketing the result of having to get your.

Trying to get your sales force.

Going back door to door to sign on new customers.

And if so how do you see that dynamic impacting profitability for the segment over the course of the travel recovery and I'm also just curious if you have any initiatives to kind of build a more robust self serve offering to accelerate the margin improvement overtime.

Yes, great questions.

It's different for the <unk> for a provider so the fork.

Sales and marketing expenditure leans too.

Two sales salesforce acquiring new restaurants, signing up new restaurants.

The business has lost some restaurants, independencia and has to replenish some of it but it's.

It is not a huge factor we're coming.

From behind from where we were in 2019 and number of restaurants, but it's not a it's not a dramatic difference.

But we have ambitious goals to continue to grow our restaurant base.

New countries, where we're relatively under indexed like Germany, and U K, where we've made an acquisition of <unk> just before the pandemic.

Also in an existing markets getting deeper into tertiary fortiori some word cities.

And so there is still growth to be had there.

Some recovery from from Las restaurants, but not that dramatic.

On Viator.

It's different there the mix is very much skewed to <unk>.

<unk> marketing to non people marketing expense external marketing expenditure.

<unk>.

On Google and other online online channels, so more variable in nature.

In that particular part of the business.

There.

We have not seen a major impact of <unk>.

Lots of supply in the pandemic.

<unk>.

Acquiring more supply is not a huge priority we have a lot of supply we.

A lot of the 2017 2018 2019 years of building our supply base very aggressively and we have a supply base second to none and we're pretty happy with what we have we're always adding of course.

But it's it's not a big part of our cost growth are our cost growth in viator is very focused on on the front end improving R. R.

Our front end points of sales and in marketing.

Great and it sounds like experiences.

Benefited a bit from continued strength in Europe , and North America.

As Europe continues to improve can you just talk about your supply strength in that region and how you see the European travel recovery impacting.

That business. Thanks.

Yes, pre pandemic actually Europe as a destination for experiences was larger than the U S. As a destination. So we've historically been very strong.

From our point of sale perspective, we have been much stronger in the U S. English speaking in general U S UK, Australia, but from a destination perspective, Europe has always been very very strong and very important for us.

And that change in the pin debit can 2021 U S. S. A destination was really important to us.

But as I as I, just as I said in my opening.

Or answer to one of the questions actually in April Europe , as a destination crossed over again and what is actually at par with or a little larger.

More recently than the U S as a destination for experiences.

And as I also said U S travelers going to Europe , which was OIBDA.

As an important was historically an important part of our experiences business actually is above 2019 as well from a sales perspective.

In April so Europe is coming back very strongly in Europe as an important destination market for us we still have room to grow.

In Europe as a point of sale and we're making good progress there and have ambitions going forward for 'twenty, two and beyond to make Europe as a point of sale, even more important to us but it is a destination, it's always been up there.

Thanks for the details appreciate it.

Okay.

Our next question comes from the line of Lloyd Walmsley with UBS. Your line is now open.

Thanks.

I'm wondering if you can just talk a little bit about how Matt is thinking about reviewing the strategy, yes anything you can share on how.

From a process standpoint under new leadership, what that might look like how the board is thinking about that.

A lot of.

A lot of different irons in the fire just wondering if there is.

Anything from a process standpoint, you can help us with.

Hi.

Excellent question cant help you too much as he hasnt really started yet obviously with our <unk>.

On boarding procedures were getting them up to speed on the business I can share that he is very focused on.

Identifying clarifying improving focusing on that strategic piece, what are the core differentiators for tripadvisor via via our upstream competitors R. R.

Our downstream clients, who are also looking to address the same needs are the same travelers and leveraging the tremendous assets that tripadvisor has in terms of trust in terms of.

Guidance our position in the ecosystem.

And the ton of first party data that we have being the largest travel site on the Internet obviously it from from trade desk, Matt comes with a ton of experience looking at data through that lens, that's really quite a big business to the subscription question earlier I mean, the launch subscriptions.

Part of.

Dow Jones in Wall Street Journal, So he's got.

Relevant experience in a number of the different areas and of course, it will be up to him.

<unk> Amazing leadership team, we have here to craft out that kind of that that next strategy clarification and the changes that he might want to wake so.

Great question.

Bridge, you to give them.

More than just the next earnings call too.

To get back to everyone on it.

Okay. Thanks, and good luck Steve Thank.

Thank you.

Our next question comes from the line of Bean CPL with Cleveland Research. Your line is now open.

Great. Thanks, a question on.

Revenue progress there has been really impressive it sounds like it's tracking ahead of expectations for the year.

Margin outlook.

<unk> is unchanged. So I guess when you have more revenue in unchanged margin.

Also implies that youre, adding back some additional fixed costs.

I think <unk> was probably about half of the $200 million of fixed cost saves that you guys.

You saw through the pandemic.

Now basically it looks like you are adding all of those back in 2022 can you help me understand if that is the case or if I'm missing something there and also help us understand what types of things you're spending on in 2022 that are different than what you're spending on in that segment in 2019.

Yes, Vince.

Accurate that we are reinvesting some of the overage, we've seen that in the quarter and therefore, the for the rest of the year in E&E back.

Back into the business.

Marketing oriented.

The what.

Growth.

You are acquiring new customers at.

Levels that are immediately lossmaking, but.

Returning over a longer period means that.

You are able to push harder on that.

That will come at the expense of EBITDA. So thats part of what we're doing continuing to push hard on that.

We're also investing in some new marketing channels that we that we've experimented with.

And so on the experiences side, it's predominantly <unk>.

Wishing more on marketing, which should translate into <unk>.

<unk> 2022, and 2023 revenue as well as an improvement in how we position much less of a focus.

Pushing even harder and experiences on our our people cost.

On the restaurant side, it's really steady as it goes we're executing on the plan and were in line with the plan and not much changes to the plan is that we originally had.

On the restaurant side, we are in in 2022 compared to 2021, making investments in our.

Are people capabilities in particular, both growing our restaurant base, but also improving some new products and services, we're particularly happy in that area with some of the more fintech oriented products that we have been developing we've pushed had been pushing hard on the.

On the growth of <unk>, which is an ability to through the app.

At a restaurant.

Four four for consumers and for restaurants to integrate with with great benefits for us long term and capturing loyalty and for restaurants as well.

And gift cards is another area that we're growing the ability to give gift cards to friends and family.

For restaurants, which are the forces promoting as well.

And numerous others initiatives are the focus there.

Dining is a is a big category in Europe , it's relatively underpenetrated online compared to.

The United States the Fork hasn't.

Truly awesome market position in most of Europe .

With opportunities to grow its market share in the UK and Germany, and so where we're playing to win with that with that business in the European restaurant landscape.

Helpful and a follow up there so it sounds like some additional marketing I think that you had previously expected variable expenses in the segment as a percentage of the revenue look pretty similar in 'twenty two as they did in 2021, but with a more restart with an additional push in marketing are you now expecting that to be.

The higher <unk>.

And then related to that when you think about the long term path for E&E margins.

I kind of calculate variable as percentage of revenue is probably running over 50% now of sales.

Is there a long term place where you think that can settle you talked about gross margins being pretty good. There. I mean is this something that variable could get down to a 30%, 35% over time and get closer to kind of where variable.

As a percentage of sales that you see in <unk> can you help us understand that.

Yes, with the sort of the lifetime dynamic central a repeat performance of cohorts and repeat improvements.

We expect not only growth from.

From acquired were not expecting and we're actually seeing very strong growth on our free channels, we see strong growth of repeat bookings and revenue in our experiences business.

That's.

Over time that that part of repeat bookings will grow as a percentage over time, and we will provide more leverage on marketing overtime.

That's clear.

A clear impact of of an LTV model.

And then secondly, we haven't fixed cost base, but with substantial scale that we're seeing fixed costs as a percent of revenue is.

Is coming down for for Viator.

And that's going to provide leverage going forward. So if you just take those two points together that makes us basically confident that we have we.

We can show strong.

Mid twenties.

Plus type of margins in that business for.

For the fourth.

That is a scale game as well.

Still growing the platform.

With high growth rates and the underlying cost structure, there is favorable as well with scale will come attractive margins there as well. So we look at both businesses and say, yes. The margins are not there yet at the level of potential but that is really all you can point to really hold to to the growth the growth.

<unk> that we have in those two businesses under the underlying these businesses are both very very healthy.

Thanks, Jeff Nice to see the top line progress and E&E and thanks for the color on the margin path.

Thank you.

There are no further questions at this time I'll hand back the call over to Mr. Steve Kaufer for closing remarks.

Well thank you.

Let's see in.

So these being my final remarks on what is my final earnings call as CEO of Tripadvisor.

Thank you all and all of our employees past and present for your continued support of this amazing business.

Over the past 22 years, we have built a passionate community of travelers that helps hundreds of millions of travelers in diners every month, enabling them to plan and have a better trend.

Along the way we have helped millions of businesses, even the tiniest ones in the remotest corners of the planet to find their audience and grow via the global reach of our platform.

The idea of Tripadvisor was a good one clearly, but the real success of Tripadvisor belongs to the thousands of people who invented it built it ran it evolved it and turned it into the most popular travel site on the Internet.

Special Thanks to all of you who helped build this company.

At Tripadvisor, we believed in the power of travel to do good.

I have a sign in my office, it's a quote by Mark Twain that reads.

Travel is fatal to prejudice bigotry and narrow mindedness.

I truly believe that travel can be a positive force that brings us closer together and a partial antidote to the many divisive issues in the world today.

And for Tripadvisor. This is a special company that will always hold a special place in my heart.

There is also a company with a terrific future ahead as we are only a few chapters in on this remarkable journey.

I'm excited to hand, the reins over to Matt and the entire Tripadvisor team to invent the next chapter trip advisor and help bring the world closer together. Thank.

Thank you. Thank you all for the privilege of leading this amazing company.

This concludes today's conference call. Thank you for participating you may now disconnect.

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