Q2 2023 TripAdvisor Inc Earnings Call
Okay.
Yeah.
Good day and thank you for standing by welcome to the trip advisor second quarter 2023 conference call. At this time, all participants are in a listen only mode.
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I would now like to hand, the conference over to your speaker today, Angela White VP of IR. Please go ahead.
Thank you Todd good morning, everyone and welcome to term advisors second quarter 2023 financial results Conference call. Joining me today are Matt Goldberg, President and CEO and Mike Noonan CFO last night after the market closed we filed and made available our earnings release.
And that release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call.
Four we began I would like to remind you that this call may contain forward estimates and other forward looking statements that represent management's views as of today August three 2023.
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 forward looking statements with that I will turn the call over to Matt. Thanks.
Thanks, Angela and thanks to all of you for joining us this morning.
For the second quarter on a consolidated basis, we delivered healthy revenue growth of 18% across the group driven by our experiences offerings, which outperformed our expectations and notably surpassed our branded hotels revenue in size for the first time.
We believe this is a reflection of our advantaged position as we leverage the complementary nature of our viator and Tripadvisor brands to lead the market in this high growth Underpenetrated and fragmented travel category.
Group, adjusted EBITDA was $90 million or 18% of revenue within the range, we provided last quarter.
Importantly, our teams continue to make progress across our segment strategies at.
At Tripadvisor core we are executing on our engagement led strategy by reinvigorating our focus on world class guidance products to fuel our diverse monetization paths at via <unk>, we are reinforcing our leadership position in experiences by investing in awareness enhanced products and repeat bookings to capture more.
At the <unk>, we're focusing on driving healthy growth with significant margin improvement this year by delivering value to both diners and restaurants as the leader in the European dining market.
Mike will cover the details in his remarks, but I think it is important to note. This upfront to place our quarterly performance in the context of our strategy.
We're five months into a multiyear strategy at Tripadvisor and as we've shared previously the financial impact will take time to materialize, while we're still in the early days, we're already seeing encouraging momentum as we execute and we will continue to reinforce our focus on our highest conviction priorities at the same time, we will balance off.
Operating with financial discipline with how we deliver on our longer term plans to.
To provide flexibility to invest in our strategic priorities. This year and next we have initiated actions to achieve cost savings within the organization.
This is expected to result in an estimated $35 million of annualized savings.
These actions are aligned with our strategy and we believe will help position us for the future.
We're making meaningful progress on our strategic initiatives in late June we launched a significant upgrade to trips are core trip planning and itinerary product. This includes the introduction of a new generative AI powered travel itinerary feature which Leverages a combination of best in class Llm's along.
With our proprietary data and trusted content. We've been pleased to received positive consumer feedback, which we believe highlights our unique opportunity to deliver better recommendations based on the advice of real travelers and to integrate AI fully into our overall trip planning experience.
While the feature is still in public beta or early metrics are promising with user satisfaction scores already approaching nearly 70% positive feedback on individual recommendations and meaningful conversion to saved trips.
The completion rate at which travelers are providing inputs to generate an itinerary is approximately two times higher than our historical average for other similar structured inputs.
And travelers are signing in as members to engage with this feature at approximately four times our site wide average.
We know from our internal data that when casual visitors to our site convert to members. Dave is at four times more often and monetize at 10 times the rate of non members.
And this is only the beginning going forward, we have a robust product roadmap that includes extending these features to our mobile app on both iOS and Android and integrating hotel and tour recommendations.
The rollout of our trip planning tool is an example of delivering on our strategy to drive deeper engagement with travelers. We have also scaled improvements to our content submission flow UX and expanded to additional destinations leveraging AI and ml tools to bring together guidance from our community and our editorial team.
As a result, we have seen a lift in travelers saves new itinerary creation and membership sign ups.
We also continue to make progress on our group wide customer data platform, which now has nearly $2 billion profile double the number from last quarter. We tested initial use cases, including how we retarget shoppers across across both tripadvisor experiences and viator and saw a meaningful uplift in traffic engagement conversion and <unk>.
Sure.
We continue to see strong momentum in our tripadvisor experiences marketplace, where much of the Q2 growth came from our ability to guide travelers to the experience that best meets their needs specifically, we redesigned attraction pages and improved product discovery exposing over 30% more travelers to bookable experience.
Then we did in the same period last year.
This is consistent with our strategy to lean harder into Tripadvisor is unique strengths, our breath of supply across free and pay things to do combined with our guidance content, while exploring ways to fully leverage via towards depth of complementary capabilities as the leading bookable experiences platform.
We expect that we will be able to extend our ability to match, our traveler demand with relevant suppliers to other marketplace categories in the future.
Let's shift to Viator, our high growth business, where we've been on a mission to drive market leadership and a significant value creation that we believe is available to the category leader.
Our teams are executing on this path leveraging all our assets and capabilities across the group to do so and delivering results that speak for themselves.
Across all points of sale, we saw tremendous growth in Q2 revenue grew 59% year over year, which came in higher than our expectations with gross booking value growing to approximately $1 1 billion or 40% year over year.
Adjusted EBITDA loss was just $2 million, which was even better than we expected. Despite the incremental investments we are making.
Our investment at <unk> is delivering immediate and significant revenue growth and puts us in a position to sustain long term category leadership.
One of our areas of focus has been on driving <unk> brand awareness and customer acquisition.
We're also delivering meaningful improvements in our.
Repeat rates with repeat bookers, driving outsized growth, which gives us increasing confidence in our unit economics and margin potential over time.
We have a tremendous opportunity to drive awareness for the OTC category and experiences and to build our brand alongside it. We believe we can shift traveler behavior from an often disjointed booking experience to viator, a single convenient place to see sort and book experiences. We're early into our brand investment, but the signs are positive.
Since the launch of our brand advertising last fall, we're seeing growth in awareness and related metrics like direct traffic and branded searches.
Spend is a clear example of our decision to build scale and long term customer economics, despite delayed profitability.
We're also focused on enhancing the traveler and operator experience, we're investing to deliver more value across the board in programs aimed at travelers partners and suppliers.
Ongoing improvements to the critical points in the traveler experience such as a faster easier checkout and app improvements are contributing to improved conversion.
We're exploring ways to leverage these gains for our Tripadvisor experience as point of sale as well as we lean into the complementary strengths of our brands.
We're also listening to operator feedback and making improvements to how we drive value to suppliers we.
We've previously mentioned our supplier program accelerate which now represents more than half of our GBP and contributes to higher take rates.
Finally at the Fork the team achieved 19% revenue growth combined with meaningful year on year margin improvement, putting the business on a path to achieve profitability in the back half of 2023.
On the supply side of our marketplace. One of our priorities is to increase the number of quality restaurants on the platform by demonstrating clear value to our restaurant partners.
It differentiates through a trusted brand and a loyal relationship with diners.
In addition, our ERP software provides restaurants with purpose built tools analytics and marketing promotions that help them drive incremental revenue and margin improvement.
Successful sales execution and priority geographic markets combined with improved market conditions relative to last year have driven multiple consecutive months of net restaurant growth.
On the demand side, we continue to focus on enhancements to diner acquisition and repeat engagement that will increase usage on the <unk> platform.
Our app continues to be a key channel for profitable growth and so far this year, we've seen installs grew at over 30% year on year.
In addition, the portion of bookings from repeat diners across the <unk> network is now more than three quarters of our bookings, which we believe will contribute to profitability over time.
As we look to the back half of the year, we're monitoring the health of the consumer closely we continue to see consistent pattern that indicate health and travel are data from customer behavior on the Tripadvisor site reflects stability across room rates quality of hotels and length of stay.
Most encouragingly, we continue to see a meaningful opportunity to serve the traveler in search of experiences, which is increasingly core to travel planning with more travelers, indicating they plan to book experiences ahead of their trip.
We believe this continued interest in travel and experiences bodes well for our vision strategy and market position.
Before I close I want to take a moment to thank our teams for their ongoing commitment as we continue to transform our business together.
We are encouraging proof points at Tripadvisor strong growth and market leadership in the experiences category of biotech and a clear path to profitability at the fourth.
We have conviction about the road ahead, none of these pads as easy and I'm grateful to all our colleagues who continue to demonstrate strong execution.
With that I'll turn the call over to Mike.
Thanks, Matt and good morning, everyone.
I will review the results of the second quarter included segment commentary and provide some color on expectations for the second half of the year.
All growth rates for 2023 are relative to the comparable period in 2022, unless otherwise indicated.
Now on to Q2, we.
We delivered results that were in line versus our expectations for the quarter.
Consolidated revenue was $494 million, reflecting an 18% growth rate or 19% on a constant currency basis, and adjusted EBITDA was $90 million and represented a margin of 18%.
Our results reflect continued strong performance and experiences both at <unk> and Tripadvisor core.
Turning to the segment performance for the second quarter.
Tripadvisor core delivered revenue of $279 million, which represented 2% growth.
This was in line with our expectations, though branded hotels declined more quickly than anticipated decreasing 7% year over year.
Within branded hotels or hotel <unk> offerings performed slightly better than expected.
However in hotel meta we did see some uneven performance across the geographies.
In U S and APAC, we performed in line with our expectations of low single digit declines, which reflected the anticipated tougher year over year comparison.
In the U S. We continue to see strong pricing as a result of solid execution from our team as well as a healthy domestic travel market.
In our European Hotel meta revenue declines were larger than expected due to delayed and lower seasonal peak and increased competition in the paid channels.
Although we saw healthier volume trends in July we did not see our typical seasonal patterns in may and June .
Because because summer peak season is generally driven by paid channels. The more competitive environment had a greater impact on paid click volumes on our European meta revenue in the quarter.
We specifically chose to maintain rois and prioritize profitability over growth.
Our unpaid channels in Europe , followed a similar seasonal patterns, but to a lesser extent.
Experiences in dining had another strong quarter growing revenue, 43% with experiences growing over 50%.
The performance, we see with this offering underpins the growth in the category and provides strong evidence of our ability to monetize the diverse traffic at Tripadvisor core.
Display and platform had a solid quarter with revenue growth of 14%, marking another period of consistent backlog growth.
Our other offerings revenue declined by 7% due.
Due to continued de emphasis of our rentals flights and cars offerings, while at cruise offering grew at well over 20% in the quarter.
Adjusted EBITDA in Tripadvisor core was 96 million or 34% of revenue, which was slightly below our expectations for the quarter and approximately eight percentage points lower than last year's comparable period a 42%.
A little over half of the margin deleverage is due to the impact of phasing of hiring last year as head count increases were weighted to the back half of the year.
The remaining margin pressures due to increased performance marketing from continued growth in experiences as well as the lower hotel meta revenue.
Turning to <unk> revenue was $216 million, reflecting growth of 59% or 61% on a constant currency basis, which was meaningfully higher than our expectations.
Gross booking value was approximately $1 1 billion and grew approximately 40%.
Revenue growth was higher than gross booking growth primarily due to the gross bookings to revenue recognition timing as well as increased take rates year over year.
These results were driven not only by strong demand across geographies, but also conversion rate improvements as our teams continued to refine and optimize the customer journey.
Adjusted EBITDA loss at <unk> was $2 million or negative 1% of segment revenue one percentage point lower versus Q2 of last year.
The deleverage of one percentage point comes largely from the investment in brand spend which offset the impact of lower performance marketing and head count costs as a percent of revenue.
We started our brand campaigns in the second half of last year, and we expect to continue for the back half of the year.
We're very pleased with the performance of our marketing spend which is continuing to deliver new customers at a greater pace than expected.
These larger cohorts of new customers are contributing to our rapidly expanding foundation of reliable repeat bookers.
We see that each successive new cohort has higher revenue retention rates plus with reliable repeat booking behaviors. The result is that we can deliver stable predictable revenue growth and increasingly profitable bookings.
Repeat bookers tend to spend more as well.
Ah repeat Booker on average purchase more items in the first Booker and at a higher average item value.
And repeat bookers come to us through unpaid channels at a higher rate with each successive booking.
This customer behavior. It gives us great confidence that we can achieve very solid long term margins at <unk>. However.
Day, we're focused on building, a large and durable leader in the experiences sector.
We will continue to invest across all areas of the business not only in building large profitable customer cohorts, but also in user experience supply and in mobile were.
We're making great progress on all these areas.
At the <unk> revenue was 38 million and grew 19% or 16% on a constant currency basis.
Bookings growth of approximately 5% was impacted by tougher comparison versus last year due to the timing of brand campaigns as well as strong recovery and post pandemic dining in last year's comparable period.
We all we are very pleased with the improved trend in profitability.
Adjusted EBITDA loss in Q2 was $4 million or negative 11% of segment revenue, which is a meaningful improvement over last year's margin of negative 22%, especially in light of Covid subsidy benefit we received during the same period last year of $11 million.
Drivers of this leverage where lower sales and marketing as a percent of revenue due to the timing of planned brand investment between Q1 Q2 versus last year.
Turning now to consolidated expenses.
Cost of revenue de Levered by about 100 basis points due to the increased weighting of vital related Cogs as a percent of consolidated revenue.
These costs include credit card processing fees, which increase with <unk> towards transaction volume.
Sales and marketing expenses de Levered by approximately 260 basis points, primarily due to an increase in <unk> performance marketing and brand spend.
Technology and content expenses de Levered by approximately 160 basis points driven by increase in people costs.
General and administrative expenses de Levered by approximately 280 basis points, driven by people cost and a combined benefit in Q2.
Q2 of 2022 of $13 million from the fourth sub Covid subsidiary and to a lesser extent, a non income tax related benefit and Tripadvisor core.
Now onto our cash and liquidity position.
Free cash flow for the quarter was $90 million, which was down versus $282 million in Q2 of 2022. This year over year decline was primarily due to a 113 million payment related to the previously disclosed tax settlement with the IRS for the periods of 2009 2011 in.
In addition to a $64 million U S tax federal tax refund related to the cares Act received during Q2 'twenty two.
Of last year.
As we discussed last quarter, we expect to receive a tax refund of approximately $45 million to $55 million from a foreign tax jurisdiction during 2023 as part of the tax settlement.
We ended the quarter with a strong balance sheet with just over $1 1 billion in cash.
Finally during the quarter, we amended our credit facility of $500 million extending its maturity to 2028.
I will provide a bit more color on the cost saving initiatives, Matt mentioned in his commentary.
As we continue to drive operational transformation across our business we.
We are embarking on a broad plan to reduce costs.
We recently initiated a series of actions that we estimate will yield approximately $35 million in annualized savings primarily from head count reductions across various roles at Tripadvisor core which includes corporate G&A.
Due to the timing of these actions, we expect only modest savings this year as they will they will more fully benefit us next year, but will allow us to more effectively execute on our stated segment strategies.
As we move through the rest of the year, we will continue to explore areas across the segments for additional savings which include other discretionary costs and our real estate footprint.
Yeah.
Turning now to thoughts for Q3, and the rest of the year.
Starting with Q3.
For Tripadvisor core we expect a low single digit year over year revenue decline driven by the trends we saw in Q2 in particular and branded hotels.
In <unk>, we expect year over year revenue growth in the low 30% range driven by the monthly stepped down through the quarter from Q2 growth rates as we comp very high growth rates last year.
In the fourth we expect year over year growth rates to marginally accelerate from the second quarter's levels.
Try a different segment mix with vice or counting for more growth more of the growth in previously expected.
Finally, we expect consolidated adjusted EBITDA margin to be approximately 150 to 350 basis points lower versus 2022.
This implies margin at Tripadvisor core to be approximately two to 400 basis points lower than 2022 levels.
<unk> margin to be approximately flat year over year as they reinvest upside to drive revenue in market share growth and the fork to continue to significantly improve margins year over year.
Lastly, we expect the in year impact from the previously mentioned cost savings initiatives to be largely realized in queue for industrial have a minimal benefit to the 2023 fiscal year.
With that I'll hand, the call over to the operator for Q&A.
Thank you very much we will know conduct question and answer session as.
As a reminder to ask questions. Please press star one one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one one again.
Please stand by while we compile the question and answer roster.
And now we will have <unk> con Simon.
Riley Securities. Please go ahead.
Yeah. Thanks.
Just a few questions remained maybe just on the on the core tripadvisor side of things.
Given the outlook.
For for the backpack of the low to mid single digits.
The client I was hoping you were thinking about kind of this this segment kind of coming back to go beyond 2023.
Hi, debit cards, there I know, you're not driving and then on AI and pay to see the deployment trips.
I'm, just wondering about the commercialization opportunities and hollander civilly with Ya.
To.
Get that into the.
Enter the motion as well or are you just looking at engagement first followed that commercialization maybe in a year from now or something like that.
Thanks, not it it's Matt.
We believe that we are managing through a transformation of our business.
And many of the trends we've seen are trends that had been long known and we understand them and we put our strategy in place precisely to deliver a diversity and stronger business through a more consumer focused engagement strategy that we really believe is gaining traction now.
Now when we first communicated our strategy in February we noted that we didn't expect to see incremental revenue impact in 2023 from the strategy. We expect to have more concrete information to share as we start to look towards 2024, how our investments are beginning to drive both that engagement and the kpis.
Which we started to share the early green shoots and things that are giving us really strong confidence that that engagement can then relate to a financial profile that begins to show the kind of growth that you just asked about and I would just note that we believe that these strategies are going to have a better use case.
For the consumer which will bring them to our site more frequently to stay longer and to repeat with us more than they have in the past. So we're really looking at a more targeted more valuable.
User and audience and we believe that as we leverage the product innovation that we've been doing and as we really think about the way that we deliver that world class guidance experience. We can then deliver that user into a set of revenue streams, which will include our media business, which is outperforming the market today and can.
<unk> to make progress.
Sure <unk> business, which we believe can be sustained over a long period, although we understand it's not the growth driver and through our marketplace business, which we believe we've already proven what we can do to fuel growth at via tour and we think we can match our demand with supply in multiple categories overtime.
I think the second question was related to AI.
And we have a strong focus.
With urgency to execute on AI across our business.
And ultimately we started to show that with the launch of our new trip planning tool. We think engagement will result from that I mentioned, we're starting to see really good early signs around completion rates member signing user satisfaction.
This is in fact, the beginning of how we will integrate AI into all of our products and services as we deliver a more personalised more relevant more predictive and more contextual experience that will get people coming back now we're leveraging AI in multiple ways, obviously, we're using it for our.
And our tools were also using it in the way that we power our content.
And we are delivering authentic insights.
That enhances the user experience and are having positive uplift we think we can use AI.
And a number of different ways and a differentiated fashion.
First of all we've got proprietary first party data we have every interaction from hundreds of millions of visitors that's tracked across multiple touchpoints and frankly is proprietary to us we have human insights from real travelers in a billion reviews, and we have a trusted brand and we're known for that World class.
Guidance and our traveller community. We think we are unique in our ability to connect to those things and combine our first party data are reviews and created user graph that will be unique and make that experience better over time.
So when we think about delivering in our product we think about three things we think about the authentic content first party data a trusted brand we have all three and we think it makes US unique we will also leverage AI and other ways, we will leverage AI to be more productive.
We're already improving our productivity testing with our engineers, we're going to look at other opportunities in customer service translation, how we think about marketing and creative optimization.
We think there's a lot of potential there and of course, we want to influence the ecosystem and so we are partnering with open AI, Microsoft Google to be their understand how this ecosystem.
Evolves and frankly influence it so that we get our fair share of value the urgency as in our organization. We are staffing this to do it and it's one of the reasons. We wanted to create the flexibility to make sure that we are focused on our highest priority initiatives, where we have real conviction. So thank you for asking about that we're very excited about it.
Thank you. Thank you.
Thank you and one moment for next question.
And then we had Lloyd wamsley.
Mhm U B S great.
Alright, great. Thank you.
Just ask about some of the European weakness in the amount of business can you give us a sense of how much of that is kind of on the user side versus you know the.
The customer side and bidding bidding levels I think the 10-Q made it seem like Cpc's are strong so maybe more a function of engagement.
Then.
Just going back to the AI question it sounds like you're seeing some pretty big upticks in insight I think Simon's and saves and that maybe you can elaborate on what what you mean by the completion rate getting better and then what have you seen in terms of these these cohorts of people ultimately migrating into.
The hotel funnel.
You're seeing those people eventually monetize or or is that more just something you need to.
To do that.
You need to integrate hotels to to get that level of to.
To connect and connect the monetization anything more you can say there would be great. Thanks.
Hey, Lloyd it's Mike I'll take the first part and I think that will take the second part yeah. Just a few big points about the matter business overall, and then I'll get to European.
I'd say as a reminder, we were expecting declines right in the business as we are facing a tough comp west 0.12 U S. In APAC performed as expected and really was this more unusual pattern we saw in Europe .
And it really did stem from a very delayed in a more muted seasonal pattern.
Are are seasonal as I said prepared remarks.
No peak season tends to be more paid traffic driven and where we saw was just a much more competitive environment and those paid channels.
So it was.
A more of a a.
Volume certainly a volume impact in the quarter in EMEA, we saw some some price pressure tube is more of a volume in the pay channel.
We reacted accordingly, we chose very specifically to maintain our rojas.
Really.
Really solve for profitability over growth in this region.
I will say that we as I said in July we saw a nice return.
Really globally, but we saw it as well in July and in Europe as well.
But we very much based our outlook for the year on a more personal view of kind of what we saw in the majority of Q2 and.
Battle, if you take the second piece yeah. Thanks.
Remember.
We just recently launched our AI driven trip planning tool. It went out at the end of June we scaled it.
Across the U S.
Through the web.
In July so it's an early beta and we're really excited and think that we have a very strong foundation to build on and we're going to lean into that stay with our teams are excited about the product.
And we will continue to to to push it forward in terms of what we're seeing.
We have seen.
That I mentioned completion rates what that means is the rate at which users are providing the full set of inputs to generate an itinerary.
Has been double what we've seen in the historical average for things like quizzes and other times, where we are asking consumers to provide structure inputs now the sign and you have to be a member to use it so the sign and rate at which users are coming in for.
Four times the site wide average and this is really good because.
If it drives membership log in that is core to our strategy that that provides us with an understanding of the consumer we can be more personalized we understand how to deliver a better overall experience and of course with these kinds of tools the more that they get used to better the models are and they are trained.
We have a mix of of Llm's and we're trying to approach it.
To deliver the best experience, we can training it on our data and our content and so the user satisfaction is promising.
You asked about monetization, we believe starting with engagement will drive monetization and the more time that people spend on the site. The better we can connect our demand to supply in the beta version, we did not focus initially on monetization.
So we will add over the coming quarters hotels, Bookable tours, and we'll be able to drive that user into the hotel flow whether it be to look at prices and matter where to think about hotel is a category and serve up multiple products and services that get the consumer to the right hotel.
And really benefit our partners. So we think this is a really good first step and as we collect more learnings.
As we roll it out we think the monetization opportunities will be meaningful.
Okay, if I can sneak in a fall and Mike.
You're seeing any impact that the European search competition is any of this from the Google search changes.
Is that something you are seeing.
Yeah I think.
We've seen some of the chatter on this from our perspective, there's no nothing really new there. If you talk about the Carousel AD. That's a product that's been around for a while that we've been participating in.
So that's kind of 0.1 that lead to say that's not point.
Two that's a global product and as we said before U S and rest of the World acted was in line with the expectation is really more of a more of a European thing. So we didn't see anything from a product Google product perspective that we attributed that European performance too.
Okay. Thanks, guys.
Thank you we will have our next.
Question.
Now we will have Richard Clarke from Bernstein. Please go ahead with your question.
Hi, Good morning, a couple of questions. If I can on March and just just firstly on the.
Mischief prior guidance on core just trying to square that with your comment about focusing on return on advertising spend is that therefore more down to mix to the indeed division within call how much of a of a headwind does that give you and then secondly, just wanted to ask about the fire saw kind of long term margin outlook.
Prime management team is to talk about 20% margins when we try and.
Run costs versus a revenue, that's where it looks like maybe you're heading more towards sort of 10 or low double digit margins just any thoughts on why you think vital ultimately might be able to come out.
On March.
Hey, Richard Yeah, just on the on the core Miss I would say, while we were <unk>.
Targeting ended half stable Rojas is in our globally and are met a product. We did see you know from a contribution margin perspective, right lower dollars right from from the <unk> from the meta, particularly in Europe . So that had that had an impact on the margin.
As well as as you said from a secondary perspective, some incremental investment or investments in the mix.
From the experiences business at corps, but it was really more around those lower dollars that's contributing to the margin.
In terms of <unk> long term outlook.
When we sit and look at this business we see.
No reason why this business can achieve.
Like margins in the long term.
And we look at the correlations with other similar otas in the market. We don't see that there is a really really different in margin structure.
I think we're going to stop short of saying when that happens because we do recognize and I think we've been consistent on this is that we really want to be thinking about how we create a long term durable player and leader in this category.
And we're very focused on thinking about what we've talked about several quarters.
We know there is an investment and a new user.
We see the data that new user if they come back to us is more profitable and and they stick with us longer right. So that is a pattern that we think is very important we do recognize that scale is very important this business. It's a key way we are able to leverage our cost structure and not just fixed costs, but variable.
Cost when you think about payments credit card processing customer service that really are scale benefits that are very very important to I think unlocking those long term margins. So.
We we are very focused on the.
The unit economics of the acquisition cohorts, we are engaged in today.
And will continue to manage this we believe we believe prudently.
Along a longterm glide path to getting to achieving those margins.
Makes sense, thanks very much thanks.
Thanks for it.
Thank you one moment for our next question.
Ronald C from C T city.
Hi, This is James Michael onto one on binary context of the strong growth you've seen and experienced is clearly backed by brand investments can you talk about the row as you're seeing on these ad dollars.
Second any changes to the competitive landscape for experiences overall.
Sure.
Hey, I'll take the the brand.
The brand question.
Put them brand investment a rohloff is very very difficult.
Brand is an investment we think of more of a mid term to long term investment in awareness.
That awareness benefits us.
Along many dimensions.
But it doesn't drive necessarily users right away.
Our platforms.
But it does promote again awareness it promotes.
Important.
So in traditional sense measuring rohloff is is very challenging how we do measure it.
We do measure it across various.
Categories.
Some qualitative some quantitative.
On the on the quantitative side, we certainly are looking at.
How does our branded search terms.
How are they training, which we are they are training favorably. We do look at performance statistics of conversion rates. Because there are added benefits said to that before of awareness and coming into the final and actually converting and the final which is which is very important.
We look at qualitative things which are around.
Brand surveys.
Unaided aided brand awareness all of these things we use really is a mosaic to think about effectiveness of this brand spend away from.
Traditional row us, but we are very.
Very focused on measurement of brand spent.
And will continue to do so and on the second point out on the competitive.
Contexts, there is no doubt that the experience of space as a competitive space with.
Dynamic that there are a number of players going after a very big Tan and now it's a difficult space and you've seen competitors come in and back off what you've seen is the emergence of a number of regional players who are starting from one region and thinking about how they want to get global.
We believe that we are very well positioned with.
With the combination of two brands that conserve the experiences traveler.
In different ways right. So tripadvisor in our strategies all about doing guidance that get you to the place that you want to make it happen at that point and that's what brought by the way that's abroad experience multi category, but when somebody's looking for experience, we should be able to understand it and you're looking for a place to go we should be able to offer you the things that are.
What via tour delivers is that depth right that ability to be the preeminent booking platform and the two together I think is reflective of that kind of marketplace economics, we've been talking about and we're starting to see houses together they are really driving meaningful growth. So.
I'm not surprised at the competitive dynamic and what everybody else chooses to do Ah doesn't influence what we are trying to do because we are trying to use all of our capabilities and managed prudently and thoughtfully. So that we can be the leader in the category and bring it together on behalf of the traveling we think will get rewarded for that over the <unk>.
Long term.
Very helpful. Thank you.
Thank you one moment from your next question.
Jack Kelly <unk> Oppenheimer. Please proceed with your question.
Can you speak to you know just how this will impact your ability to.
Two.
Two.
And to make.
Who are better than to innovate around Tripadvisor core and then just on the but just with by it or can you talk about the difference between gathered gross booking growth in revenue growth that that gap has widened can can you speak to those trends. Thank you.
Thanks, Ted let me start with the <unk>.
Cost savings.
This is part of our transformation work and it is very much about creating the flexibility to invest in our strategic priorities this year and next.
And so.
We are looking at how we allocate resources and creating the space to go after the biggest market opportunity. It has no impact on via tour.
We are focused on our core business and making sure that we can continue to live to deliver the promising momentum that we have shared over the last quarter or two and so that is the most important piece of this.
And we have conviction in our strategy.
This action reflects how we want to continue to support it and of course, we want to be disciplined in the choices that we make.
Yet jet on the on the gap in <unk> between gross booking growth in revenue, we touched upon a little bit in my prepared remarks, but.
The two biggest drive around the two drivers are the book the book.
<unk> timing and as well as the margin peace now.
The the margin piece that Mad alluded to we have seen continued year over year improvements in the take rates and that is across various reasons biggest reason is what we've talked about is accelerated program a very important tool for our suppliers to utilize how they advertise on our platform.
And are purposely choosing to manage how they want to pay an advertised so that's a very important tool that has been very productive for our suppliers.
That's been a piece of this of the gap the other pieces just the the timing right and I think we've been we've been our growth rates have been coming down from very high growth rates and with that you will see that difference in the booking to the Rev. Wreck timing. So it's really just the accounting timing between the booking in the actual experience itself.
Thank you.
Yep. Thank.
Mario lose some Barclays. Please proceed with your question.
Great. Thanks for taking the questions. The first one is on a chair advisor core.
Just curious if you could help us frame, how we should think about the long term EBITDA margin.
Especially after layer in the NASS cost savings when we compare that to say pre COVID-19 levels is it just structurally different going forward NASA.
<unk> experiences as a larger percentage.
We move in the back half of the year and obviously, we're getting the next year and longer term planning.
If you're really comparing against.
Pre pandemic, which I would say as many years ago.
And we have talked about this business is different in a lot of ways for those two factors that you mentioned right.
Dawn.
From the auction perspective, just that mix between the paid and free traffic has been a headwind and margins.
And that has been structural in the business.
And come to the site. So those are the two factors as you mentioned.
That would be.
Had had caused a headwind versus pre pandemic times.
And over time our strategy.
Will deliver a mix that we think will be healthy.
Terms of profit.
And revenue growth.
Just the Alabama.
<unk>, it's pretty large outperformance this quarter on the revenue side.
Not as much deceleration in the last couple of months of the quarter. So any <unk>.
<unk> categories to call out that kind of drove this outperformance.
Yeah, I I have to say.
We were very pleased with the performance in the quarter.
Did outperform expectations.
Yeah I think.
The <unk> brand is obviously, it's biggest market as the U S in North America.
We continue to see a very healthy travel market hearing you asked we saw a very healthy international travel.
North America to Europe .
A very strong.
And I think that <unk> did a very good job of leaning into that demand and fulfilling customer needs and helping its suppliers advertise effectively on its platform to to find that customer demand. So.
Yeah, I think that's right I think listeners and moves back half of the year.
We are going to comp.
100, plus per cent growth rates last year, we think that we acknowledge that those are tougher comps and you're moving into the back back half of the year away from peak peak travel and so our guide reflects that.
Otherwise very healthy business and we're very pleased with the performance.
I would just add a couple of things for texture.
The experienced traveler is.
Increasingly they're taking bigger more expensive trips right. So that some of the international stuff that we've seen and so that's been driving some growth and I think there's some categories that are really exploding, which I find fascinating cultural and theme tours.
Food and wine outdoor activities, all really good growth and so it's it's when you can offer the largest set of inventory of experiences in the world you can really allow those categories to drive a really healthy growth for the traveler.
Great. Thank you but.
Thanks.
Thank you one moment for my next question.
Steven Jew sounds credit please.
Okay. Thank you so much so I wanted to follow up about your commentary about the rise in repeat transactions for fire tour.
The sunlight.
Kris and customer lifetime value so.
Yeah, I'll I'll start I'll, let Matt chime in and the energy needs, but yeah, I think Stephen's great question. It is.
A very important stat that we are very focused on here and the company.
Because it does inform how.
How you think about bidding for new users.
As you said on an LTV basis.
And we and you get you signed up to a product, it's having a great experience.
He's a payment it's great customer service if there is a problem right. So all these things we have to nail the product experience first and foremost right and that that person exits that experience with with a with a great experience.
And how we are then ability to re market and re engaged with those users. So it really goes across all the things that by towards doing product experience customer experience and then how we then keep engaged with that user and I'll tell you. The more we're doing it ties into the CDP work, we're working on a more.
Who they are and how they can serve them once they get them in there, making the experience easier more enjoyable to book across the whole booking lifecycle no matter the device.
They are doing foundational work to make sure that the power and speed of our tech is delivering.
They're removing friction they are.
Thinking about loyalty and making sure that people come back over and over.
And so.
I think they are very focused and and their strategies clear they're focused on conversion repeat making sure that experienced this great creating more value for operators.
And delivering an affiliate program that is the best in the world. So they really.
Are clear on what they are aiming to deliver and I think the results are materialized.
Thank you.
Thank you one moment for your next question.
Brian Fitzgerald Wells Fargo.
Yeah, I'll I'll, just ripped a little bit off of Stephen's question.
You said in the prepared remarks.
Mike Moore via tour bookings come from paid channel right now is the.
Right as a second derivative at increasing or decreasing I assume it's decreasing shorts decelerating.
And so if you could unpack that a bit just.
What are you seeing in terms of travelers indoor events.
That are coming through the pay channel because clearly have really good repeat rates and so I would imagine the pay channels is getting less important.
Divisor.
Yeah, I think Brian me clarify this statement I think.
I don't think that we said we had more through the Patriot I'd say.
What we did say when when you repeat through us.
You tend to come back to us or non pay channels right you skew skew the non pay channels just to be clear on the statement.
And just overall from a channel philosophy.
The pay channels are important right, it's a great way to us find that new incremental user.
And that that's where we're very focused on having effective.
Realizing that gives us a chance to bring that user back.
On a repeat basis through.
What we hope and what we believe <unk> seen the data through more effective and efficient efficient channels. So.
I wouldn't I wouldn't necessarily there is a difference in the channels with I think with with different products are different.
Our experiences, but just wanted to clarify what we said on the call.
Okay. Thank you.
Thanks, Brian .
Thank you one moment for my next question.
Kevin compliment <unk>.
Great. Thanks, I had a follow up on an earlier question.
It's a question on the 35 million dollar.
Cost savings or cost cut that you have that you'll get the benefit of that next year do you see that as a way to make up.
The core EBITDA shortfall next year and get the corps marching back into that.
Headcount reduction was really more around how do we preserve flexibility potoroo preserve investment in the strategy that we believe is transformed into the business.
We are almost stopped short of trying to say what margins are going to be next year.
This time to develop that and talk about that later.
But it's really not around a margin solve its around how do we create the space and flexibility to continue to operate in this in this in the strategy next year on that strategy.
Okay.
So I would now like to <unk> for closing remarks. Thank you.
Thanks, everyone for joining us today.
We believe we're making good progress on our stated strategy cross each of our segments and we look forward to sharing our next next update with your next quarter have a great day.
This concludes today's conference call. Thank you for participating and you may now disconnect.
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