Q4 2024 TripAdvisor Inc Earnings Call
To withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Angela White VP of IR. Please go ahead.
Angela White: Thank you Michele good morning, everyone and welcome to to provide the fourth quarter and full year 2024 financial results call.
Speaker Change: Joining me today on the Applegate, President and CEO Michael <unk>.
Angela White: CFO.
Speaker Change: This morning, 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.
Speaker Change: Before we begin I'd like to remind you that this call may contain estimates and other forward looking statements.
Speaker Change: Represent.
Speaker Change: As of today February five 2025.
Speaker Change: Tripadvisor disclaims any obligation to update these statements to reflect future events or circumstances.
Speaker Change: 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.
Speaker Change: With that I'll turn the call over to that.
Thanks, Angela and good morning, everyone.
Speaker Change: Across Tripadvisor group, we finished 2024 strong with results that exceeded our expectations on both the top and bottom line for the fourth quarter and the full year.
Speaker Change: In Q4 consolidated revenue grew 5% to $411 million.
A healthy improvement in growth sequentially across all segments.
Speaker Change: Adjusted EBITDA was $73 million or 18% of revenue.
Speaker Change: For the full year revenue reached $1 8 billion and adjusted EBITDA was $339 million.
Speaker Change: In 2024, we delivered meaningful progress against our strategic priorities and strengthened our revenue and EBITDA mix.
Speaker Change: Accordingly for the first time, all three segments positively contributed to group profit.
Speaker Change: Now more than half of our revenue is coming from our growth marketplaces advisors, and the fork, which together delivered $52 million of incremental adjusted EBITDA versus the prior year.
Speaker Change: The experience is category is increasingly becoming the strategic and financial center of gravity of the group as we continue to position our unique assets to extend our leadership in this large and fast growing market.
Speaker Change: <unk> segment results reflect our ability to grow market share by leveraging our scale with GBP, reaching nearly $4 $2 billion in 2024 on the demand side. We continued on our journey to deliver profitable above market growth with revenue, reaching 14% for the year and growth and accelerating.
Speaker Change: 16% in Q4.
Speaker Change: Direct booking volume on the buyer for point of sale grew nearly 30% for the full year, which speaks to the consistent improvements, we're making on unit economics as we continue to scale.
Speaker Change: We put more attention on driving marketing efficiency, while investing in critical areas of the consumer facing product to increase conversion and loyalty. We continue to focus on our mobile app, which was five towards fastest growing channel with booking volume up more than 80% for the full year.
Speaker Change: On the supply side, the number of operators on our platform grew more than 15%.
Speaker Change: The value we provide them.
Speaker Change: Supply advantage is a critical asset in driving our third party partner revenue, which grew more than twice the rate of the overall segment in 2020.
Speaker Change: At branch Tripadvisor, we made significant progress on our engagement led strategy, while navigating quarterly variability driven by our legacy offerings, most notably hotel meta.
The momentum in our strategy and our conviction strengthened throughout the year.
Speaker Change: Ported by tangible progress we saw across key metrics.
Speaker Change: For example, monthly active users stabilized through the year and grew in our core geographies a reversal from declines in prior periods.
Speaker Change: Global monthly active members an important indicator of engagement grew mid single digits in 2024 and accelerated each successive quarter.
Speaker Change: Most of the active members in the U S, where we focused most of our testing and experimentation with twice the globally.
Speaker Change: Each of these engagement improvements are driven by product changes enhancements and new features that result in more persistent loyalty with our users, which we believe serves as the foundation for turning Tripadvisor back to near term growth.
Speaker Change: Our dining marketplace. The fourth segment grew revenue a healthy 18% to $181 million and delivered full year profitability for the first time in its history, representing an adjusted EBITDA improvement of $19 million over the last year.
Speaker Change: This performance highlights meaningful strategic progress at an important inflection point in the financial trajectory of this business.
Speaker Change: The fourth is position as the leading brands in the European dining market, serving more than 70 million diners and driving nearly 2 billion euros of restaurants, there in 2024.
Speaker Change: Turning to 2025, we entered the year with encouraging momentum and sharpened focus our plan positions. The group on a multiyear path to sustainable revenue and EBITDA growth across each segment.
Speaker Change: We expect to drive the majority of our revenue and an increasing portion of our profit from our growth marketplaces advisers were in the floor, while tripadvisor stabilizes and improves its financial profile throughout the year on its return to full year growth in 2026.
Speaker Change: This year, we also expect our experiences revenue to be the largest contributor of revenue to the group for the first time.
Speaker Change: This progress is consistent with our strategic vision that the experience with category has become increasingly central to travel and we are uniquely positioned to benefit from a durable secular talents.
Speaker Change: Our group strategy for experiences is clear we have enhanced our competitive advantage by taking a holistic approach to the category leveraging the full scope of assets and share capabilities to build on our leadership position.
Speaker Change: This includes the leading otas bias towards the largest global travel audience at Tripadvisor and the depth and breadth of supply spanning nearly 400000 bookable products for more than 65000 operators globally.
Speaker Change: All fueled by a powerful data asset.
Speaker Change: Our teams at <unk>, and Brent Tripadvisor will accelerate their work together by taking advantage of our Differentiators such as our first party data scale advantage trusted global brands and supply relationships.
Speaker Change: Yeah.
Speaker Change: For 2025, our strategic focus at five.
Speaker Change: It starts with delivering the leading customer experience in the category to drive our conversion and loyalty.
Speaker Change: Last year, we prioritized our investment in product user experience and data to deliver improvements in search navigation and product matching helping travelers more easily find experienced at that perfectly meet their needs as we continue our investments in product that data, we expect to see ongoing improvements in conversion repeat.
Speaker Change: Rates and customer satisfaction.
Speaker Change: We will continue to increase marketing efficiency by optimizing our marketing channels, attracting and converting high intent customers and delivering better landing pages of other funnel improvement along the customer journey.
Speaker Change: We have many assets to leverage, including our cross brand signals relevant content and merchandising tools, which together will deliver a better shopping experience to fuel ongoing improvements in our unit economics.
Speaker Change: Turning to our supply will continue to focus on building the world's best experiences catalog expanded choice in key destination and filling geographic and category gaps to better serve our customers.
Speaker Change: We will continue to enhance our tools to help suppliers participate in our marketplace and optimize their bookings given.
Speaker Change: Given the importance of supply plays in the travelers value proposition, we expect investment in supply to benefit conversion and bookings across all points of sale over time.
Speaker Change: Finally, these investments will also benefit our ability to grow our third party partnerships.
Speaker Change: We value our distribution partnerships is a key channel to reach incremental profitable demand that would otherwise be difficult to directly access.
Speaker Change: By extending the features and functionality of our partner API, we expect to enhance existing partnership unlocks new relationships and continue to grow our third party channel at high rates.
Speaker Change: Turning now to the brand Tripadvisor segment, where we expect 2025 to be the year, we shift our trajectory and stabilize our financial profile. We've progressed our transformation methodically over the past few years, managing the known structural challenges of our legacy business.
Speaker Change: Setting the foundation for the future.
Speaker Change: In 2023, we focused on establishing the right leadership talent and aligning the organization.
Speaker Change: Last year, we delivered new product features developed capabilities to scale, our products stabilized our audience and improve our engagement metrics.
Speaker Change: This year, we've continued to align our cost structure to heightened our focus on the areas, where we have a high level of conviction to scale financial outcomes.
Speaker Change: As a starting point, we will focus on accelerating experienced growth across tripadvisor branded services with hundreds of millions of visitors to our site every month.
Speaker Change: We have the opportunity to convert more travelers to bookers with improvements, including enriched guidance through more visual browsing checkout enhancements and more relevant recommendations.
Speaker Change: We don't build marketing campaigns around the experiences category as we continue to drive awareness among our large and growing base of travelers looking at the plan experiences.
Speaker Change: We will also work across the group to tap growing demand for experiences on tripadvisor across underpenetrated geographies and verticals.
Speaker Change: Second we will continue to drive adoption of our mobile App, where we provide comprehensive trip planning tools trusted guidance and seamless multi categories booking capabilities.
Speaker Change: We plan to expand our hotel booking offering in our App and ramp the availability of Bookable hotels, focusing on conversion and rewards.
Speaker Change: We're leveraging AI to facilitate improved guidance and more relevant suggestions through personalized sort and our recently launched chat based AI travel assistant which services personalized information it helps travelers take action faster.
Speaker Change: We expect to see our product improvements continue to drive growth and active app users and scale, our booking revenue across categories.
Speaker Change: And third we will differentiate expand awareness of the benefits of our membership offering which focuses on rewarding our most engaged travelers with personalized offers and the ability to earn and redeem awards across their bookings.
Speaker Change: We're also testing new content formats to drive traveler engagement that made contributions on our platform easier such as tips lifts and community interaction.
Speaker Change: To scale these initiatives will invest in measurable full funnel marketing at branch Tripadvisor, which we believe will drive financial impact this year, while strengthening our trusted brand.
Speaker Change: Our testing over the last year has given us confidence in our ability to expand awareness of the products, yielding deeper engagement and higher monetization.
Speaker Change: Diversify our acquisition channels and drive more direct traffic and mobile adoption.
Speaker Change: Now turning toward dining marketplace. The pork segment will continue to build on our leadership position in the European Diamond market, while improving our financial profile.
Speaker Change: In 2025, we will further leverage the operating efficiencies, we achieved last year and accelerate our product innovation driving balanced growth across both our diner and restaurant offerings.
Speaker Change: On the diner side, we will focus on driving engagement and conversion.
Speaker Change: Improvements in our search rankings in bookings slow <unk>.
Speaker Change: Including more personalized recommendations.
Speaker Change: We will continue to balance marketing investment across social performance marketing brand awareness and our dine rewards program to enhance growth and long term customer retention.
Speaker Change: On the restaurant side will continue to improve our supply quality scaling acquisition through more cost effective product driven strategies to improve the onboarding experience.
Speaker Change: We've invested in enhancing and modernizing our ERP software and we expect this to accelerate restaurant usage of the product providing additional growth opportunities as we increase penetration in our existing and new supply base.
Speaker Change: We're also pleased with the ramping of new partnerships like the ones, We've recently announced with Mastercard and Vodafone that further diversify our revenue mix.
Speaker Change: These partnerships underscore the strength of our brand and the opportunity to attract and retain new diners, we don't reach elsewhere.
Speaker Change: Finally across all areas of the group, we're leveraging our investments in data and AI to reinforce our unique and privileged position of trust.
Speaker Change: We believe our proprietary data content assets and trusted brand will help us create substantial value through new products and meaningful partnerships and a fast moving landscape.
Speaker Change: We sit on a treasure trove of data across all categories.
Speaker Change: First party data of our large and growing logged in audiences to strong signals of intent engagement patterns and conversion data across multiple marketplaces.
Speaker Change: Our teams have been quick to adapt to the pace of AI innovation infusing into our product leveraging it in our operations to better provide service to our customers and operators and delivering the most relevant insights and recommendations.
Speaker Change: Across the AI landscape, we've been collaborating with a number of platforms to tap new incremental sources of traffic as we test and learn more about audience engagement and conversion opportunities across our category marketplaces.
Speaker Change: We're also exploring the intersection of our differentiated content and AI agents to create a seamless way to discover and book on our platform.
Speaker Change: Our teams are innovating and experiment to expand our reach through strategic partnerships with select leaders in this dynamic space.
Speaker Change: In addition to the progress we've made across all areas of the business. We also made some important decisions related to capital allocation.
Speaker Change: And we're on the path to effectively repurchasing a significant portion of shares through an agreement, we announced with our controlling shareholder in December.
Speaker Change: Mike will talk more about this shortly but I want to be clear.
Speaker Change: Once this transaction closes likely in Q2.
Speaker Change: We will move to a new chapter for Tripadvisor group with accelerating momentum and strategic flexibility.
Speaker Change: 2025 is a pivotal year for us and despite making some hard choices recently, our teams are already well on their way executing with energy discipline and focus.
Mike: I want to thank all our employees for their ongoing commitment to our vision to be the most trusted source for travel and experiences with that I will turn the call over to Mike.
Mike: Thanks, Matt and good morning.
Mike: I'll start with a brief update on our new segment disclosures and revised presentation, then I'll review the quarter and full year and later, we'll provide our outlook for 25% in Q1.
Mike: As a reminder, all growth rates are relative to comparable period of 2023 unless noted otherwise.
Mike: First.
Mike: As part of our earnings release. This morning, we provided a table that includes additional segment level details, reflecting our adoption of the new segment expense disclosure guidelines.
Mike: As part of this update we use the opportunity to align our consolidated financials to the same line items, which we believe provides greater transparency between our segment and consolidated results.
Mike: Now turning to the results for fourth quarter.
Mike: Consolidated revenue was $411 million or 5% growth at the high end of our expectations.
Mike: Consolidated adjusted EBITDA was $73 million or 18% of revenue and was higher than our expectations due to performance at both brands to provider and bipolar.
Mike: <unk> revenue grew 16% to 186 million, which represented six points of sequential growth then.
Mike: The number of experienced book grew 20%.
Mike: And gross booking values, where GDP grew 17% to approximately $840 million.
Mike: Selected healthy travel demand in the quarter driven by the Viator point of sale, which grew faster than total segment experiences book and GBP.
Mike: As a reminder.
Mike: Total segment growth is a function of relative size different growth and profit priorities across each point of sale.
Mike: Our teams continue to leverage the strength of our brands to optimize our experiences operating globally.
Mike: Which we believe is an important differentiator in the category.
Mike: On the Viator point of sale repeat bookings growth once again outpaced new bookings growth supporting the ongoing progression of <unk> brands unit economics as these bookings come at lower.
Mike: <unk> costs.
Mike: <unk>, adjusted EBITDA was $20 million or 11% of revenue.
Better than expectations, primarily due to a nonrecurring credits to expenses related to indirect taxes.
Mike: At <unk> revenue was $204 million a decline of 6%.
Mike: Branded hotels revenue was 125 million a decline of 7% and an improvement over Q3, which.
Mike: Which exceeded our expectations due to more favorable pricing hotel meta.
Mike: We saw sequential improvement in both pricing and volume throughout the quarter.
Mike: In particular in the patients.
Mike: By geography, all regions strengthened throughout the quarter with rest of the world posting the strongest performance with modest growth year over year.
Mike: Media and advertising revenue grew 3% to 36 million.
Mike: Growth in off platform revenue, which includes creative offerings and programmatic advertising more than offset declines in traditional display advertising that correlates to traffic volume as well as the broader display advertising market, which is growing slower than other advertising lines.
Mike: Experiences in dining revenue was $35 million a decline of 8%.
Mike: Performance in Diamond continues to reflect balancing the ongoing product transitions with self service sales model and.
Mike: And experiences revenue performance continues to be driven by branch of advisor segment specific marketing strategy and ROI targets as well as the impact of funnel optimization testing, we embarked on last year.
Mike: Importantly experiences contribution profit margin remained healthy reflecting stable paid marketing rois combined with the traffic mix profile that is predominantly.
Mike: Other revenue was $8 million a decline of approximately $2 million.
Mike: Primarily due to a business model shifts and our vacation rentals offerings to merchandise supply solely from partners.
Mike: Brand Tripadvisor, adjusted EBITDA was $53 million, representing 26% of revenue.
Mike: Relative to outlook in November adjusted EBITDA with higher than expectations due to stronger volumes in hotel meta.
Mike: Prudent fixed cost management across personnel G&A and technology.
Mike: At the board revenue was $48 million or 23% growth and 26% growth in constant currency up sequentially six points or 11 points in constant currency.
Mike: Growth was driven by strong performance in both booking volumes as well as pricing.
Mike: In Q4 booking volumes grew 9% with solid growth rates across all of our channels.
Mike: Strong year over year subscription revenue growth was driven by higher adoption of paid plans and reflective of the meaningful product investments. We've made over the past several quarters. That's translated to an improved value proposition for our restaurant partners.
Mike: Additionally, Q4 performance benefited from the impact of partnership with Vodafone and Mastercard, both which initiated.
Mike: Half of 2020.
Mike: Okay.
Mike: Adjusted EBITDA was in line with expectations at breakeven for the quarter.
Mike: The operating efficiencies, we achieved personnel and technology costs allowed us to make incremental investments in marketing that we believe benefit growth in 2025.
Mike: Turning to consolidate expenses for the quarter.
Mike: Cost of revenue was 7% of revenue consistent with last year.
Mike: <unk> was 30% of revenue an increase of approximately 500 basis points due to growth in marketing spend at <unk> and before which outpaced consolidated revenue growth.
Mike: Personnel increased 100 basis points to 36% of revenue included share based compensation of approximately $28 million.
Mike: Absent share based compensation personnel was 29% of revenue flat year over year.
Mike: The increase in share based compensation of $4 million was primarily due to timing differences vesting schedules for employee equity grants.
Mike: Q4, 2023 run rate was lower than usual due to a one time acceleration of the vesting period of our 2020 companywide private brands to two years from four years as disclosed during 2000.
Mike: Technology and G&A as a percent of revenue were flat year over year at 6% and 5% respectively.
Mike: As I'll discuss in a moment, we incurred restructuring costs of 21 billion as a result of actions initiated in the fourth.
Mike: Turning briefly to the full year performance.
Consolidated revenue was $1 8 billion or 3% growth revenue growth of 14% at <unk> and 18% of the board was offset by an 8% revenue decline at branch for us.
Mike: Our consolidated performance in 2024 illustrates our ongoing focus of diversifying our group revenue mix that will fuel long term revenue and profit growth.
Mike: In 2024 <unk> in the fourth contributed 56% of group revenue up from 50% in 'twenty, three and 41% in 2022.
Mike: Full year consolidated adjusted EBITDA was 300 $300 million or 18% of revenue represented very modest deleverage of less than 50 basis points.
Mike: As with revenue, we see a growing diversification and our consolidated adjusted EBITDA is 504 in the fourth continued incremental $52 million in 2024.
Mike: Versus 2023.
Mike: Adjusted EBITDA growth of five four in the fourth was largely driven by market inefficiencies.
Mike: At 504, and prudent personnel cost management at the board.
Mike: Brian Tripadvisor delivered 301 billion adjusted EBITDA year over year decline due to the aforementioned revenue performance in hotel meta.
Mike: With investments in data and AI.
Mike: Our engagement strategy.
Mike: Now turning to cash and liquidity.
Mike: Q4, operating cash flow was negative $2 million and free cash flow was negative $25.
Mike: An improvement of $10 million.
Mike: Driven by a refund from the previously described $300000.
Mike: 2014 to 2016, IRS transfer pricing settlement and growth in deferred merchant payables, partially offset by interest payments and other working capital.
Mike: For the full year.
Mike: Operating cash flow was $144 million and free cash flow was $70 million.
Mike: The year over year declines in operating cash flow and free cash flow were driven primarily by changes in working capital and nonrecurring tax our cash outflows related to the 2014 2016 IRS transfer pricing settlement.
Mike: And other tax related.
Mike: We ended the year with approximately $1 1 billion in cash and cash.
Mike: During the fourth quarter, we announced a planned merger agreement with Liberty Tripadvisor, which will result in the retirement of approximately 27 million shares and the subsequent issuance of approximately three months shares to the ultra preferred stockholders.
Mike: As part of our agreement, we expect total outlays of approximately $400 million cash.
Mike: We anticipate the transaction to close in Q2 2025.
Mike: Details regarding the transaction can be found in the presentation, we posted this summer.
Mike: Now I'd like to turn to recent trends and our outlook for the year.
Speaker Change: As Matt mentioned in his prepared remarks, our operating teams are focused on executing against a clear set of priorities in 2025 that we believe possess.
Mike: The group consistent revenue and adjusted EBITDA growth in the medium term.
Speaker Change: <unk> diversification of our portfolio.
Speaker Change: Each segment is well positioned to accelerate its strategic ambitions. This year laid the foundation to deliver this financial profile.
Speaker Change: And finally, we're investing to improve our product both travelers and operates as well as strengthen the depth and breadth of our supply catalogs.
Speaker Change: Which we believe will enable durable growth.
Speaker Change: With sustained improvements in marketing efficiency will drive ongoing margin progression.
Speaker Change: And brand Tripadvisor will continue to manage the near term trade off between growth and profit with our strategy progressing.
Speaker Change: In Q4, we initiated a broad restructuring plan that will keep personnel costs flat relative to 2024, while enabling investments in marketing to begin scaling.
Speaker Change: <unk> led growth initiatives across experiences.
Speaker Change: The app and membership that leverage the product enhancements made last year.
Speaker Change: As before we will continue to leverage our investments in product to drive growth, while continuing to drive operating efficiencies to enable ongoing margin expansion.
Speaker Change: Now to our outlook.
Speaker Change: For <unk>, we expect consolidated revenue growth.
Speaker Change: <unk>, 5% to 7% and adjusted EBITDA margin of 16% to 18%.
Speaker Change: At <unk>, we expect mid to high teens booking volume growth.
Speaker Change: Which represents an acceleration from last year and reflect healthy underlying demand trends.
Speaker Change: For revenue, we expect growth in the low to mid teens, which incorporates approximately two points of FX headwinds at current rates.
Brian: As Brian Tripadvisor, we expect an improvement year over year.
Brian: To low single digit revenue declines.
Brian: Specifically, we expect stronger year over year trends in the second half versus the first half due in part to the difficult first year.
Brian: First half year over year comps and the impact of our marketing investment.
Brian: As before we expect revenue growth in the low double digits, which incorporates approximately five points of FX.
Brian: On a constant currency basis, we expect stable year over year revenue growth.
Brian: For consolidated adjusted EBITDA, we expect five towards nearly double adjusted EBITDA in the fourth to nearly tripling.
Brian: <unk> advisor revenue pressure from our legacy offerings will impact margins. This year, but we continue to manage costs in order to fund incremental investments, which we believe will set us up to accelerate both revenue and adjusted EBITDA growth in 2020.
Brian: On a consolidated basis this plan.
Brian: <unk> for the group to accelerate revenue growth and a return to EBITDA growth in 2026.
Brian: Now turning to Q1 2025 guidance.
Brian: For consolidated revenue, we expect flat to low single digit declines.
Brian: Which includes currency in holiday timing headwinds of approximately two points of growth.
Brian: For consolidated adjusted EBITDA, we expect margins of approximately 5% to 7% of revenue.
Brian: Adviser, we expect booking volume growth of 14% to 16% and revenue growth of 9% to 11%, which includes a revenue headwind of approximately three points due to holiday timing and approximately two points due to FX.
Brian: For adjusted EBITDA by four we said, we expect margin improvement of approximately 600 basis.
Brian: At brand Tripadvisor.
Brian: We've observed stable pricing sequentially quarter to date in hotel meta, but expect revenue decline in the low double digits due largely to a difficult comparison.
Brian: This unusually robust pricing dynamics, which was unique to Q1 2024.
Brian: For adjusted EBITDA brand Tripadvisor, we expect margins to decline by approximately 10 points, primarily due to revenue decline and related impact to contribution profit.
Brian: As before we expect revenue growth in the low teens, which includes headwinds of approximately five points from currency and approximately one point due to Easter and other calendar timing.
Brian: For adjusted EBITDA at the Board, we expect modest margin improvement of approximately 50 basis points.
Brian: Adjusted EBITDA performance at both Fort.
Brian: I joined the board reflect typical seasonal investment in marketing.
Brian: With that I'd like to turn the call back over to the operator to begin Q&A.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Brian: <unk> Q&A roster.
Speaker Change: And our first question is can it comes from the line of Stephen Ju with UBS. Your line is open. Please go ahead.
Speaker Change: Okay, great. Thank you so Matt it looks like you saw some acceleration in.
Speaker Change: And the viator experiences available growth from about 350000 to 400000.
Speaker Change: During the course of the year I.
Speaker Change: And I think that works out to about 40% supply growth in your gross bookings in the fourth quarter grew about 17% so.
Speaker Change: Can we talk about what might be happening behind the scenes between.
Speaker Change: What might be things that youre doing from a product perspective to hopefully improve conversion rates versus what might be easier comparisons. Thank you.
Speaker Change: Yes, so there's a lot going on at <unk>.
Speaker Change: Driving growth obviously, we're starting to really think about how we work between 501 tripadvisor experiences together to attack the opportunity Holistically now via tour is very focused on leaning into profit and so when they think about getting marketing efficiencies. It's both in the way that we're going to divert.
Speaker Change: <unk>, our channel mix and the way the product is going to begin to really deliver that experience that will drive repeat and more direct traffic. So theyre focused on seamless product matching and making sure. The travelers find the right experiences that will get them to come back they are focused on expanding and organizing that catalog as we grow and that.
Speaker Change: Improved sort and recommendation and improves the ability to match supply and demand in as many geographies as possible.
Speaker Change: Theyre delivering an intuitive UX all of that gets people to engage book more efficiently and then return and to enhance that we're focused on improving our app now the app is direct traffic and highly highly repeated and the app is all about UX improvements search making sure that we go.
Speaker Change: <unk> sure.
Speaker Change: Sure booking details and logistics.
Speaker Change: And as you said, we're continuing to enhance the supply catalog and Thats. Both in primary markets, but its also go into secondary and tertiary markets starting to think about what other geographies, we really want to want to serve and of course, we're improving our operating experience and making it easier for operators to onboard and to efficiently participate to get.
Speaker Change: The data they need to drive their bookings as efficiently as possible and finally, they are like all of our teams focused on leveraging AI in all of the innovation across search sorting and other product details. So we're pretty excited about the experiences category. We think we can continue in the long term to progressive set a strong and healthy.
Speaker Change: Double digit CAGR for for a long period to come as we expand margins on our path to OTI like margins down the road.
Speaker Change: Thank you one moment as we move on to our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of <unk> Khan with B Riley Securities. Your line is open. Please go ahead.
Thank you very much.
Speaker Change: Okay.
Speaker Change: I just had a baby.
Speaker Change: Does that answer your question around the category so.
Speaker Change: Airbnb is.
Speaker Change: <unk> been talking about lonzo experiences this year.
Speaker Change: I wanted to get your thoughts on what does that mean for category growth.
Speaker Change: And maybe growth for <unk> and you have a new entrant.
Speaker Change: Kind of.
Speaker Change: Creating more awareness.
Speaker Change: Yes.
Speaker Change: What does it mean for you and how you are thinking about that the other question I had was just around maybe some clarification on.
On the <unk> margins.
Speaker Change: Our margins have grown 20 pilots Mike did you.
Speaker Change: Can you provide.
Speaker Change: Some kind of guidance on how much expansion, we can expect this year and what would be the drivers for that.
Speaker Change: Thanks, Tom and good to hear from you and I'll take the first question about the category and then I think Mike will follow up with the margin question. Yes, we agree with Airbnb that Vince is a very big opportunity and we see massive size and growth ahead.
We think the interest in the experiences category just speaks to the overall size of the opportunity, but also the customer traveler relevance and it does as you suggested build category awareness, which we think we can benefit from we also really like our positioning to continue to lead in the experienced this category.
Speaker Change: We think that focused otas have an advantage, especially in this highly fragmented marketplace. We think we're advantaged with the largest scale supply we've talked about the 400000 experiences across 65000 operators that is not easy to build once you have it.
You can really leverage you can leverage it in the way that you deliver it and matching that supply with demand. We also think that as a group we have a unique position because we've got tripadvisor and it's still the largest traveler audience available anywhere we know that travelers searching for experiences is the loss.
Speaker Change: <unk> portion of our traffic and the fastest growing on Tripadvisor and we match that with the Viator focus.
Speaker Change: As it otas.
Speaker Change: Our third party B to B business, which is growing rapidly the Rev. Tech that we have to use and we really think that we can take a comprehensive approach to this category like nobody else.
Speaker Change: Mike.
Mike: On the on the EBITDA guide for full year provider.
Mike: To be clear, we would not guide on margin, we are guiding or on a dollar a dollar amount as it nearly doubled.
Mike: So I think you can you can assume that there clearly is margin expansion internet comments.
Mike: Obviously margin with nets are needed that would nearly double as well, but I think.
Mike: Very focused on that dollar amount.
Mike: Particularly with FX headwinds.
Mike: Basically this year. So thats, how were just trying to frame that for folks.
Mike: I just want to remind everybody we're really early in the experiences opportunity and there's so many different ways to grow right.
Mike: The tailwind that we see.
Mike: In general, but also as importantly, we think our otas in early stages.
Mike: We're just captured a very small percentage and theres opportunities geographically there's opportunities in categories that we're not currently reaching so we are very excited about the prospects for ongoing growth in the top and bottom line.
Mike: Got it and maybe just to.
Mike: As we understand better the impact of FX. So.
Mike: And <unk>.
Mike: Is it mostly.
Mike: U S to ask kind of going overseas.
Mike: Bookings for and Thats, how you get affected by FX, there or how should I understand.
Mike: U S versus non U S business.
Mike: Yes, that's right it's mainly.
Mike: With our euro denominated business, we have a lot of obviously U S travelers to travel to.
Mike: So Europe is our largest kind of.
Mike: Corridor travel corridor service to me.
Mike: And so where we may collect.
Mike: We have a permit to our operators in euros and Thats what creates the headwind there.
Mike: And Thats again, not the entirety of this but our biggest quarter of business and that's what's driving approximately two points of headwind.
Speaker Change: Mr. <unk>. Thank you guys.
Mike: Thank you.
Mike: Question on.
Speaker Change: Our next question comes from the line of Richard Clark with Bernstein. Your line is open. Please go ahead.
Richard Clark: Hi, good morning, Thanks for taking my questions, maybe just firstly you talked in the opening remarks about.
Speaker Change: And your members.
Speaker Change: Mid double digits, and I think a little bit later on you talked about.
Speaker Change: Having redeemable rewards members. So maybe you can just talk about your membership position. How many members do you have today what percentage of your revenue days and who is funding those rules as they say tripadvisor investment or is this something that's coming from your suppliers.
Speaker Change: Thanks, Richard I. Appreciate the question, we're really excited about membership.
Speaker Change: As we mentioned we have grown membership in the mid single digit for the year, it's been accelerating quarter by quarter. We definitely finished the year in that double digit growth.
Speaker Change: Segments of of opportunity.
Speaker Change: We've talked about membership in the past and said that we had over a 130 million members. So when we're talking about growth in membership we're talking about growth.
Speaker Change: On that base.
Speaker Change: Membership is.
Speaker Change: Some things were.
Speaker Change: It's really all about bringing together the reason you would come to the platform and engage both to contribute and to benefit from those contributions. So our experimentation in the product is actually quite important there.
Speaker Change: We are obviously investing in that.
Speaker Change: In that space and leveraging AI to drive to drive membership and personalization and of course, we are adding book and we've been booking and experiences and we added hotel bookings.
Which we talked about last quarter, and we're really excited about what the hotel booking offer can do because the cross category booking opportunity in our App has proven to be self reinforcing and drive growth.
Speaker Change: The rewards are rewards, where we take the full price and then return it we are funding those those rewards.
Speaker Change: And they are proving to be something that creates.
Speaker Change: Repeat and stickiness. So we're excited to continue to lean into rewards and expanded across the categories.
Speaker Change: This membership, which we will formally launch with more features and functionality this year.
Speaker Change: Should differentiate it for our most valuable travelers and we will have products improvements, including a wallet.
Speaker Change: Great across categories and linking to the web will have these rewards and promotions and of course, new content contribution formats to Reengage. Our community. So membership is something that we think is critical to our engagement strategy and we're seeing good growth there.
Thanks, Matt maybe just a follow up you said in your prepared remarks.
Speaker Change: <unk> ownership position is resolved tripadvisor will enter a new phase.
Speaker Change: What has been held back by the ownership position what changes the other side in terms of what you can do.
Speaker Change: Running the business, what we will do better.
Speaker Change: Yes, thanks for asking the question.
Speaker Change: Without controlled ownership our capital structure is much cleaner simplify we think it removes an overhang and it gives us more flexibility for how we pursue our vision and our strategy. We are solving for a single class of shareholders. We no longer have any limitations from a controlling shareholder that.
Speaker Change: Might have there.
Speaker Change: Views of what what level of investment, we want to make and what that means for their for their shareholders and we see many avenues to create shareholder value ahead.
Speaker Change: And we think theres a lot of different ways.
Speaker Change: Drive that value in the future and we'll continue to operate the business as we always have to maximize value for shareholders and will always be open minded about the best way to do that we see opportunities for organic investments, we see opportunities for M&A.
Speaker Change: And certainly we think we will continue to be as efficient as we can.
Speaker Change: All of our capital allocation decisions.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Hey.
Speaker Change: Our next question comes from the line of Trevor Young with Barclays. Your line is open. Please go ahead.
Trevor Young: Great. Thanks, just back to buyer tour and experiences the updated figures there, suggesting you expect the category to a persistent kind of low double digit growth territory through 2006, and obviously a greater shift to online. So maybe online piece growing 12% to 16, if I heard your 25 guide correctly high teens growth by some share.
Speaker Change: Our gains there, but obviously a focus on EBITDA dollars doubling as well why not manage that EBITDA dollar growth to a lower level and accelerate your growth. There. If this really is kind of one of the most attractive areas of online travel and then second question on the AI side I think you've partnered with <unk>.
Speaker Change: Like city and it looks like possibly open AI with operator as well can you just expand on those partnerships a bit in terms of what you get what you get in return anything around deal economics duration of those arrangements and whether you would tend to do more of these partnerships. Thank you.
Mike: Hey, Trevor its Mike ill take the first part and Matt will take the second part.
Speaker Change: So it's a great question.
Speaker Change: By trade off in growth.
Speaker Change: Profitability I would say.
We are making decisions or are attempting to make decisions on maximizing growth.
Speaker Change: And that means what does that ROI look wise on those.
Speaker Change: Customer acquisition, particularly the paid channels and we think we're making it.
Speaker Change: <unk> decision around that and that has had some certain payoffs.
Speaker Change: Awesome LTV associated with the acquisition. So we feel like that spend is efficient I think some of the margin progression you're seeing is.
Speaker Change: Is inherent in the model, meaning exactly what we've been talking about which is dry.
Speaker Change: New user acquisition and get them to repeat and when we get into the repeat they come back to is cheaper.
Speaker Change: So I think we're pretty happy with where we are on the efficiency scale of our acquisition dollars and the margin.
Speaker Change: I think a modest margin progression youre seeing it.
Speaker Change: Much about the model and repeat.
Speaker Change: Repeat dynamics again more about.
Speaker Change: Our leading growth on the table per se.
Speaker Change: So I think we're pretty happy with the tradeoff as we speak and as we go into.
Speaker Change: As we've talked about for.
Speaker Change: For our 2025 priorities it by four we're very excited about the product the private investment.
Speaker Change: Which have unfold whole other way to leverage our marketing expense outside of acquisition right. So that's really focusing on <unk>.
Speaker Change: Conversion, bringing the best supply assortment in the right way all of the things that <unk> talked about in his prepared remarks. So we are pretty excited about the continued progression of growth and profitability.
Speaker Change: That really are outside of the market levels.
Speaker Change: Yeah. Thanks for the question.
Speaker Change: We are so excited about the prospects for AI and.
Speaker Change: And I don't want to be pollyanna ish about this like any new technology with the speed of adoption like AI is going to impact every industry and every company in the world.
Speaker Change: And it definitely has the potential to propel and industry and we also have seen areas of disruption I think it's early but we clearly see an opportunity for AI to be a tailwind both for travel and for us in the way that we innovate we think that those companies that are most curious about the potential for AI to best serve customers who.
Speaker Change: Have the assets that match up well are going to have opportunities to innovate and grow and we believe clearly that we're one of those companies for travel for many reasons.
Speaker Change: We've been aligning the team making investments in our data putting AI at the heart of our product innovation.
Speaker Change: And driving productivity across all of our areas and yes exploring partnerships with the top players in the industry.
Speaker Change: We have advantages we have are well recognized and hugely trusted brand, we have the highest quality content asset.
Speaker Change: Really strong <unk> database to leverage to create new opportunities and we of course have our own proprietary first party data that only we will use.
Speaker Change: So we're going to do a lot on our own platforms and we're also going to look at partnerships. Because we think we have a strong position in the ecosystem to go after AI first traffic and search.
Speaker Change: Customers incremental sources of demand and leverage our relationships of trust with our suppliers now when you look at Perplexity, which you asked about.
Speaker Change: We're forging this partnership.
Speaker Change: To leverage all of those assets.
Speaker Change: To really think about the AIG first funnel.
Speaker Change: Connecting with the users that come through that channel to get access to our trusted guidance.
Speaker Change: And an AI powered experience, we think it's incremental and I have to say, we're seeing it's early but we're seeing that this traffic is high intent and a keen bert higher than typical traffic that we get that is that it's pretty like this and so that deal if the deal that we.
Speaker Change: We are putting in place to build on we're starting with hotels were going to add experiences and restaurants over time, and we think that we can both tap traffic as well as revenue share increased brand awareness and yes. There is a licensing component to it but you know what we're not looking for short term licensing dollars we were looking for.
Speaker Change: <unk> a long term durable position in this ecosystem and that is one of our partnerships are about you're right. We're collaborating with open AI operator, because we think there's a huge opportunity here and we think collaborating allows us to be best positioned favorably as a gentle AI emerges we are going to learn.
Speaker Change: <unk> and adapt everything we do to participate in that and bring our proprietary our supply to the table and we're really excited.
Speaker Change: Excited about that and yes, we will look at deals that focus on our long term positioning traffic cross product innovation, a holistic exchange of monetization.
Speaker Change: Or we can forge partnerships with the companies that we choose and we'll have more to announce.
Speaker Change: And the not so distant future.
Speaker Change: Great. Thank you both for all that.
Speaker Change: Thank you and our next question is going to come from the line of Doug Anmuth with Jpmorgan. Your line is open. Please go ahead.
Speaker Change: Great.
Doug Anmuth: Thanks for taking my questions I have two.
Doug Anmuth: On the first one you talked about formally launching membership later this year.
Doug Anmuth: Could you talk about how the upfront.
Doug Anmuth: The Tripadvisor plus offerings.
Doug Anmuth: Pumps.
Doug Anmuth: What do you expect to include in the membership offering.
Doug Anmuth: And then secondly on Brian.
Brian Tripadvisor returning to positive growth in 2026.
Doug Anmuth: What needs to happen for this to happen and does that.
Doug Anmuth: Turning to growth assumption include monetization model.
Speaker Change: Yes. Thank you for that so we've talked a bit about membership and let's be clear what we're talking about here is our free membership.
Doug Anmuth: Offer.
Doug Anmuth: Tripadvisor, which is giving those who come in are logged in format more value and more reasons to engage with us.
Doug Anmuth: Very much about the way that we are evolving our products and content to serve them in a logged in environment. It is about how we are bringing together cross category bookings.
Doug Anmuth: That will be rewarded and it's about giving them more ways to get value out of our platform across all of our.
Doug Anmuth: All of our categories, and we feel like adding marketing about that and making people aware of the benefits of that.
Doug Anmuth: Membership is going to continue to drive growth and we've obviously already seen over the last year really good strong growth in our in our membership program like you want to hit the second question, Yes. So a very sad day flights kind of what do we see as the key drivers for 2026 EBITDA margin growth at branch or provider, it's really really a couple of things.
Doug Anmuth: Some of them are related to investments some of them are.
Doug Anmuth: As you move through the investment phase with the one is obviously stabilizing hotel now.
Doug Anmuth: And I think we continue to work on product work with our partners to create a great great offering there.
Doug Anmuth: And that that is.
Doug Anmuth: Part of that piece.
Doug Anmuth: One is getting our hotel commerce.
Speaker Change: Beginning to scale and that is what Matt talked about about our booking capabilities for odell capabilities, so getting some modest scale at that.
Speaker Change: It contributed to the margin secondly experiences growth backed that Brexit is a very very important platform for us and we spent.
Speaker Change: As we've said are very remarks.
Speaker Change: We have been spending a lot of times, but how to optimize that point of sale that surface.
Speaker Change: A very different traffic than bipolar.
Speaker Change: Massive massive funnel it's global.
Speaker Change: And we've been spending a lot of time of optimizing growth there.
Speaker Change: We have.
Speaker Change: We have a kind of a tough comp in the first half of the year on experiences growth, we get past that in the second half of the year. This year and then next year, we're looking to realize into 26, we'll be looking to that to be.
Speaker Change: A solid contributor to the EBITDA story.
Speaker Change: Third it's really clarifies it for it's really getting passed.
Speaker Change: And through some of the investments we have been ongoing through data AI. These are a lot of investments we've had the past two years that fund all the investments and the things that Matt talked about in terms of the App in terms of membership obviously as part of that and experiences so getting getting getting to that and then lastly, just really comps on a lobbyist.
Speaker Change: Legacy offerings.
Speaker Change: We've been saying pretty consistently the last.
Speaker Change: Many quarters that we are focused over the last few years.
Speaker Change: B prioritize.
Speaker Change: Some of the largest of the legacy business, we've had whether it's.
Speaker Change: Car rentals, we just talked about changing our business model in vacation rentals. These create.
Speaker Change: Not insignificant EBITDA headwinds and so we will be lapping in game pass those in 2026. So I think we're excited about what we're doing this year. We're excited about how it sets us up for that progression in 2000.
Speaker Change: Got it thank you.
Speaker Change: Thank you and our next question comes from the line of James Lee with Mizuho Securities USA. Your line is open. Please go ahead.
James Lee: Alright, thanks for taking my questions.
James Lee: First one is more big picture amount of US thinking then maybe you could talk about the long term view on the hotel meta search and it's clearly a highly debated topic given all the challenges you have seen over the last couple of years. So how do you think the industry would navigate and can you talk about maybe the FERC the transit.
James Lee: <unk> needed.
James Lee: For Tripadvisor.
James Lee: And second question, it's about viator.
James Lee: You guys previously talking about wanting to elaborate.
James Lee: To expand your <unk> strategy.
James Lee: Typically.
James Lee: Does it make sense to expand kind of beyond Otas for example, maybe credit card companies pinpoint.
James Lee: Yeah.
James Lee: Hey, James.
James Lee: Look in the long term, we think that meta continues to be a relevant product and we've said in the past that as long as we are delivering high quality traffic to our partners and giving them a good investment opportunity, they're going to continue to come in.
James Lee: And we've obviously had variability in that line, but I do believe that we've done a lot of good work to stabilize revenue from our hotel shoppers across both meta and hotel booking in the App.
James Lee: And meta we've done product work and has driven price advantage why because we're figuring out how to deliver higher quality leads to our partners and they are willing to pay more for that and so I think you will continue to see us lean into that and identify ways that meta and booking in the App work together, which we also think can drive really good unit.
James Lee: Economic and average revenue per user so we're enthusiastic about it we think in the long term is a player but we've also said if not our future growth drivers. So as we stabilize the revenue from hotel shoppers as we accelerate our growth of Tripadvisor experiences as we scale the impact of our process improvements that are driving engagement and unit economics.
James Lee: <unk>, we think that together that's the profile we are not trying to return to.
Speaker Change: Some kind of a of a paid consumer paid subscription or anything like that this is a very thoughtful integrated strategy that we are seeing is working and so we're enthusiastic about now on five towards Youre right.
Speaker Change: We have a <unk> business that we haven't broken out in the past, but it is growing and I think I've said in my prepared remarks. It grew at twice the rate of the segment as a whole and we think that we can grow to be very quickly. We think it's one of our unique advantages and it's really interesting because we think it's incremental we.
Speaker Change: Think it's additive it's profitable we think we'd give tremendous value to our partners and our supply advantage, which we continue to accelerate is a key part of bringing people to the table to have a conversation with us that would be different from anybody else in the world to offer this opportunity and we think we can continue to enhance our.
Speaker Change: Current relationships add new partners and yes, there are many categories. Thanks for mentioning some of them I tend not to put the new category focus out publicly because thats, how were going to grow and I don't necessarily want to signal that to anybody else, but youre absolutely right. There are many many industries and categories that we have to go to and geographies and many.
Speaker Change: Of them would be customers that would be hard to reach and acquire and retain on our own. So we're very excited about our third party business.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you and I would like to hand, the conference back over to Matt Goldberg for closing remarks.
Speaker Change: Thank you all for joining us on this morning's call as I think you can see where we're really excited about what 2025 represents for us in many ways. It's an inflection point in setting the group up with renewed momentum and strategic flexibility and plans across every part of this business.
Speaker Change: I know, we're all excited about I couldnt be more proud of the work we do every day or more optimistic about the next phase of growth at Tripadvisor group, We look forward to seeing you at the next update thanks, everyone.
Speaker Change: This concludes today's conference. Thank you for participating you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].