Q1 2025 TripAdvisor Inc Earnings Call
Good day, and thank you for standing by. Welcome to the TripAdvisor First Quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hands is right.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today. Angela White, vice president of investor relations. Angela, please go ahead.
Angela White: Great, thank you, Felicia. Good morning, everyone, and welcome to TripAdvisor's first quarter of 2025 financial results call. Joining me today are Matt Goldberg, President and CEO and Mike Noonan-CFO.
Angela White: Earlier this morning, we filed and made available our earnings release and that release you'll find recommendations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call.
Angela White: Before we begin, I'd like to remind you that this call may contain forward estimates and other forward-looking statements that represent management's views as of today May 7th, 2025. TripAdvisor displace 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 the former looking statement. With that, I'll turn the call over to Matt.
Matt Goldberg: Thanks Angela and good morning everyone. I wanted to kick off by acknowledging that last week we closed our merger transaction with Liberty Trip Advisor holdings in which we effectively purchased all of our shares held by L-Trip and no longer have a controlling shareholder.
Matt Goldberg: We also finalized our conversion to Nevada, a proposal that was approved by shareholders in 2023.
Matt Goldberg: As we pass this milestone, we couldn't be more energized about where we're heading and how we'll continue to build on the progress of our transformation path.
Matt Goldberg: This means not only delivering near-term financial results, but also focusing on the biggest opportunities to differentiate and drive long-term growth, margin improvements, and shareholder return.
Matt Goldberg: Across the group, our vision is to be the most trusted source for travel and experiences, and we've been steadily executing a strategy to diversify our portfolio, optimize our legacy offerings, and shift our mix to our growth marketplaces.
Matt Goldberg: We see a number of opportunities ahead where we believe we're uniquely positioned to drive meaningful value including scaling our marketplaces starting with experiences where we'll accelerate our momentum as a holistic global platform.
Matt Goldberg: Delivering on our travel guidance strategy by leaning into our trusted brand, authentic content, high intent audiences, and data to stabilize our hotel category.
Extending our leadership position in the dynamic European dining market.
Matt Goldberg: leveraging our unique assets to establish ourselves as the premier AI-driven personalized recommendation platform across all categories for any destination.
Matt Goldberg: and a capital return framework that delivers ongoing value for our shareholders.
Matt Goldberg: And now, turning to our performance for the first quarter. Our financial results exceeded our expectations, with consolidated revenue of 398 million, representing 1% growth, were approximately 3% growth in constant currency, driven by our marketplace businesses.
Matt Goldberg: Viator and the four continued to deliver underlying growth rates in the mid-teens with steady improvements in profitability, a direct result of our ongoing execution strategy of balancing growth, profitability and market share.
Matt Goldberg: Consolidated Adjusted EBITDA was 44 million, or 11% of revenue, which also exceeded our expectations.
Matt Goldberg: Since our last update, we've continued to make meaningful progress against our strategic priorities in the experiences category as evidence by the results in our Viator segment.
Matt Goldberg: Our bookings growth, revenue scale, and profitability progression reflects our disciplined approach to optimize our marketing channels as we grow our active customer base and gain market share in key geographies.
Matt Goldberg: Our market position is strong. Booked experiences grew 15% and revenue grew 10% or approximately 12% in constant currency to 156 million. The adjusted EBITDA loss of 18 million represented an eight-point improvement in margin.
Matt Goldberg: These financial results were driven by strong operational execution that drove higher conversion, increased marketing efficiencies, and a larger, more relevant supply base for travelers.
Matt Goldberg: On the customer side, we continue to prioritize making the traveler experience and viator the most easy to use, highest converting, and best in class experience in the market.
Matt Goldberg: We're accelerating our velocity of experimentation and rolling out product improvements that are driving higher customer engagement, more relevant recommendations, and a more seamless booking flow, resulting in an up list in conversion.
Matt Goldberg: And our ongoing focus on the mobile app is driving faster bookings growth than other surfaces and continued progression of our unit economics. The result of an increasingly loyal user base and a growing portion of our bookings mix returning to our platform through direct channels.
Matt Goldberg: On the operator side, we're streamlining the onboarding process by providing new Gen AI tools that reduce friction and improve the quality of listings for new operators signing up on the platform.
Matt Goldberg: We're also expanding our supply catalog to secondary and tertiary markets to enhance the breadth and depth of choice to meet the needs of consumers as their travel destination preferences evolve.
Matt Goldberg: Finally, our third-party partnerships continue to drive healthy above-market growth and allow us to serve incremental, difficult to reach travelers and geographies profitably.
Matt Goldberg: We continue to work across the group to leverage all of our assets and capabilities to accelerate our global position in the experience's category.
Matt Goldberg: Our teams are finding new ways to take advantage of the complementary relationship between Viator and Brand TripAdvisor, with its broad geographic reach, depth of content, proprietary travel to click stream data and trusted brand.
Matt Goldberg: Given the strength of TripAdvisor's presence globally, we're also testing how and where to lean into marketing our brands optimally across geographies.
Matt Goldberg: Each brand serves different audiences in unique ways, but together we're identifying incremental growth opportunities as these teams collaborate across marketing, product and supply to leverage expertise and drive our ambitions for the category.
Matt Goldberg: Turning now to Travel Planning and Guidance and Brand TripAdvisor, where our first quarter results reflected the work we're doing across the platform to drive a better experience for travelers. [inaudible]
Matt Goldberg: Revenue was $219 million, a decline of 8% and adjusted EBITDA with $65 million or 30% of revenue, both exceeding our expectations driven by more favorable pricing at hotel meta and prudent fixed cost management.
Matt Goldberg: In Q1, we continued to scale products improvements that yielded deeper engagement and drove financial outcomes.
Matt Goldberg: This is a direct result of our ongoing transformation work that puts the traveler at the center of an engagement-focused experience rather than optimizing for click arbitrage.
Matt Goldberg: In the most notable example this quarter, we made enhancements to the hotel shopping journey that prioritized the needs of the traveler, including surfacing more relevant information and better context for their accommodation search.
Matt Goldberg: This drove a shift from a funnel optimized for same session click revenue to a traveler-centric experience optimized for engagement, cross-selling, booking flow, and longer-term value.
Matt Goldberg: The result was a notable increase in traveler engagement, along with higher quality traffic and a meaningful conversion uplift for our partners, which in turn yielded pricing strengths and gave us the confidence to roll these changes out globally.
Matt Goldberg: We also made the largest changes to our mobile app in the last four years, with an ambitious vision to deliver the world's best travel planning companion.
Matt Goldberg: We started by customizing and simplifying the onboarding flow, improving navigation, search and destinations, and further integrating maps, trip planning, and a seamless nearby experience all of which are key elements in planning and booking.
Matt Goldberg: We also rolled out an updated in-app hotel shopping experience that presents both booking and price comparison options and we're seeing monetization improvements driven by better conversion, which isn't surprising given the importance of pricing for travelers as they plan and book their trips.
Matt Goldberg: While this is just the beginning, these changes are supported by a plan in the app marketing campaign that's driving early positive trends in app growth, revenue, and trip creations.
Matt Goldberg: Finally, we continue to enhance the product experience by further integrating AI across all of our surfaces.
Matt Goldberg: Focusing on providing contextual and personalized recommendations made possible by our billions of content and user combinations .
Matt Goldberg: Our popular AI review summary that highlight the provenance of real travelers are now available across hotels, restaurants, and attractions.
Matt Goldberg: R.A.I. Travel Assistant provides conversational, intelligent, and dynamic recommendations based on traveler prompts, and we're leveraging A.I. to better detect fraud and moderate content which enhances and protects our brand trust.
Matt Goldberg: Looking ahead, our teams at Brandt TripAdvisor are laser focused on an execution road map to scale product winds across hotels, experiences, and the app.
Matt Goldberg: This includes expanding our in-app booking capabilities and hotels, leaning further into our membership proposition, compounding conversion wins and experiences, and scaling our investment in marketing throughout the year to drive deeper engagement and monetization.
Turning now to our European dining offering, The Fork
Matt Goldberg: Revenue this quarter grew 12% or 16% in constant currency to 46 million as we continue to diversify our revenue mix and drive monetization of our enhanced B2B software offering for restaurants.
Matt Goldberg: The adjusted EBITDA loss of 3 million reflects normal seasonality and a margin improvement of 100 basis points.
Matt Goldberg: The progress we've made in enhancing the quality of the product we deliver to our restaurant base is driving significant monetization improvements, with Q1 revenue growth from software subscriptions of over 90%.
Matt Goldberg: This growth stems from adoption by our existing restaurant base, as well as new restaurants, a clear signal of the strength of the value proposition we provide, and a testament of how our multi-year investment in product and technology is delivering results.
Matt Goldberg: Finally, the Vodafone partnership we signed in the second half of last year drove strong revenue growth in the first quarter and we expect our partnership with MasterCard to start driving incremental financial impact in the second half of this year as that partnership goes live to consumers this summer.
Matt Goldberg: across the group and in each of our segments, we continue to chart our AI future, leveraging our data investments to reinforce our unique and privileged position in the travel ecosystem.
Matt Goldberg: We believe that authenticity and trust will become increasingly precious and highly valued in an AI future and were well positioned among the travel incumbents along these dimensions.
Matt Goldberg: We've established ourselves competitively for the opportunity ahead by leveraging our distinctive assets, our trusted global brands, high-quality data and content from authentic travel experiences, scaled global audiences, and deep and diverse partner relationships across all categories and operators.
Matt Goldberg: These capabilities allow us to position ourselves as a trusted AI intermediary for travelers and create substantial value through rapid innovation in our own products and services, as well as by experimenting and learning through select partnerships.
Matt Goldberg: During the quarter, we added new strategic partnerships with Amazon Alexa and Microsoft Azure with a growing pipeline of other opportunities ahead.
[inaudible]
Matt Goldberg: We're also harnessing the potential of AI across the company from customer service to engineering, content moderation and business analytics to marketing and supply acquisition.
Matt Goldberg: We're moving quickly but thoughtfully to create a culture where every one of our employees is obsessed with addressing evolving consumer preferences in the age of AI and embracing the tools available to serve them most effectively.
Matt Goldberg: Finally, I want to turn to an important topic, the backdrop of macro uncertainty.
Matt Goldberg: We recognize that travel isn't immune to slowing economic growth. Consumers have important choices to make when their personal balance sheets are pressured.
Matt Goldberg: Our business performance has been durable thus far in 2025, and we're closely monitoring our data for leading indicators.
Matt Goldberg: For example, experiences volume growth remains healthy, both sequentially and year-over-year, but we're monitoring early signs of pressure and average booking value and cancellation rates.
Matt Goldberg: Our data has reflected some of the anecdotal themes following recent policy actions. For example, the US share of international travel from certain source markets is down, particularly from Canada, and our share of domestic travel across regions is up.
Matt Goldberg: Still, we've not seen these translate into material changes to consumer travel intent or business
Matt Goldberg: Consumers have largely defended discretionary spending and categories like travel and especially experiences.
Matt Goldberg: Travel sentiment remains positive, with travelers continuing to plan leisure summer travel and putting experiences at the heart of their budgets.
Matt Goldberg: We believe we can benefit by serving travelers who are increasingly sensitive to price and choice whether through price comparison or by offering the most diverse set of options in the experiences category across all price points close to home or abroad.
Matt Goldberg: From what we see today, it would be premature to make a call and where things are heading.
Matt Goldberg: We'll continue to monitor and adapt to any potential near-term changes in the landscape, but we're confident that travel remains a durable long-term growth opportunity, and we are well-positioned to capture the enduring demand for travel and experiences ahead.
Matt Goldberg: With that, I'll turn the call over to Mike. Thanks Matt. Good morning.
Mike Noonan: I'll start with a review of our financial performance and later we'll provide our outlook for Q2 and the full year.
Matt Goldberg: As a reminder, all growth rates are relative to the comparable period in 2024 unless otherwise noted.
Matt Goldberg: Consolid revenue came in above our expectations at 398 million or growth of 1% and 3% in constant currency.
Matt Goldberg: Consolidated Justice EBITDA, 44 million or 11% of revenue exceeded expectations due to the revenue outperformance at Grand TripAdvisor and lower than anticipated fixed cost, primarily in personnel and marketing.
Matt Goldberg: Advisor, the number of experiences booked grew 15%, which was in line with expectations for the quarter.
Matt Goldberg: Viator, and third party points of sale grew faster than the segment overall, offsetting performance at the TripAdvisor point of sale.
Matt Goldberg: Growth in our largest source market in North America remained healthy, and overall booking windows remained stable year-rear, with only some very recent narrowing occurring over the past month.
Matt Goldberg: Our third-party channels have been growing very fast and remain an important strategic priority as viator continues its journey on becoming the ubiquitous online platform in the category.
Matt Goldberg: The bookings that come to these channels are highly incremental and largely sourced from regions outside our core markets.
Matt Goldberg: While these bookings have a lower average booking value, they are immediately profitable and able us to reach incremental travelers as we continue to scale.
Matt Goldberg: Gross Booking Value, or GBV, drew 10% or 12% on a constant currency basis to approximately 1.1 billion.
Matt Goldberg: The difference between the growth in the number of experiences booked and the constant currency GBB growth was due to the decline in average booking value, which is a result of higher mix of third-party bookings relative to the first quarter of 2024.
Matt Goldberg: Firetor Revenue grew 10% to 156 million or approximately 12% on a constant currency basis.
Matt Goldberg: In addition, we estimate the timing of holidays was a nearly 4-point headwind to revenue growth in the quarter.
Matt Goldberg: Viator, Justin Ibidok, was a loss of 18 million and represented an 800 basis point margin improvement.
Matt Goldberg: Repeat Bookings Growth on Byter Point of Sale once again outpaced new bookings growth, and our cohort retention rates have remained consistent over the last few quarters, supporting the ongoing progression of bytores, unit economics, as these bookings come at lower acquisition
Matt Goldberg: In addition, our direct channel, which includes our at bookings, continues to show strong growth and is increasing as a percent of our overall mix.
Matt Goldberg: These trends continue to strengthen our confidence in a long-term margin opportunity for this business at scale.
Matt Goldberg: At Brandt TripAdvisor, revenue was $219 million, a decline of 8%.
Matt Goldberg: Brandon Hotell's revenue was 148 million, a decline of 7% and sequentially flat with Q4 exceeding our expectations due to more favorable pricing in hotel meta.
Matt Goldberg: Pricing remains strong as we exit the last quarter and grew year-to-year throughout Q1 in both US and Europe . A reflection of healthy demand in recent product optimizations that Matt described earlier, which drove higher value clicks to our partners.
Matt Goldberg: Pricing Growth was offset by volume headwinds which were expected and related to last year's challenging compare in both page channels, as well as the product changes Matt discussed earlier which traded off lower click volume for higher quality clicks.
Matt Goldberg: While still down your year in the US and Europe , revenue growth trends improved sequentially.
Matt Goldberg: Media and advertising revenue declined 6% to 31 million. Declines in traditional display in programmatic advertising revenue were driven by overall traffic volume dynamics, which offset growth in our off-platform revenue including creative offerings and programmatic advertising.
Matt Goldberg: Experiences in dining revenue was $30 million, but declined to 15% [inaudible]
Matt Goldberg: B2B restaurant revenue declines, reduced our product lead transition to a self-service sales model.
Matt Goldberg: Entering the year, we expect an experience as revenue growth at TripAdvisor would be challenged in the first half due to lapping the short-term benefits we recognized last year in some product optimization testing, as well as remaining consistent in our ROI targets for this point of sale.
Matt Goldberg: Importantly, the brand-to-revider point in style remains very profitable with well over half of the revenue coming through direct channels.
Matt Goldberg: We expect to see improved performance as we exit the second quarter through a combination of the laughing of these headwinds along with our planned investment in product optimization and marketing.
Matt Goldberg: Brand TripAdvisor adjusted EBITDA with $65 million, representing 30% of revenue.
Matt Goldberg: Relative to our outlook in February , adjust the EBITDA with higher due to the stronger than anticipated hotel meta performance.
Matt Goldberg: Lower than expected cost of sales and lower personnel in GNA costs.
Matt Goldberg: Year of a year, the leverage was due to lower revenue and contribution profit with more than offset lower-personality and aid costs.
Matt Goldberg: At the fork, revenue was 46 million, or 12% growth, and 16% growth in constant currency.
Matt Goldberg: Growth was driven by a healthy mix of solid booking volumes in our BDC offering, which grew 9% in the
Matt Goldberg: Strong performance in our B2B subscription revenue driven by higher adoption of higher price premium plans.
and Higher Revenue from Partnerships we announced last year.
Matt Goldberg: The increased penetration of higher price plans in our B2B offering is a testament to the product and technology investments we've made over the past few years, which have consistently translated into accelerating profitable growth.
Matt Goldberg: Justin Ebert out the fork was slightly better than expectations at a loss of 3 million due to a lower personnel and technology cost.
Matt Goldberg: Compared to last year, adjusted EBITDA benefited from lower personnel costs which upset increases in cost of sales and marketing.
Turning out to Consolidated Expenses for the Quarter [inaudible]
Matt Goldberg: Cost of Revenue with 7% of revenue, approximately 100 basis points higher due to higher transaction-related costs at Vidor in the fork.
Matt Goldberg: Marking costs were 43% of revenue, an increase of approximately 200 base of points due to increased marketing spend to support growth.
Matt Goldberg: Personal cost decreased by approximately 200 basis points to 36% of revenue, including share-based compensation of approximately 28 million, and was due primarily to this year's cost reductions at brand TripAdvisor.
Matt Goldberg: After the chair-based compensation, personnel costs were also lower by approximately 200 basis points.
I don't know what you're going to do. You're not going to do that. You're not going to do that. You're not going to do that.
Matt Goldberg: Technology costs were flat at 6% of revenue, while GNA's% of revenue was lower by 300 basis points due to an accrual for a potential regulatory matter of approximately 10 million in Q1 of 2024.
Now, turning to cash and liquidity.
Matt Goldberg: Q1 operating cash flow was 102 million, and free cash flow was 83 million.
Matt Goldberg: During the first quarter, we raised 350 million in an add-on to our existing term loan B. We expect to use the proceeds to pay down our convertible notes due April 1st, 2026.
Matt Goldberg: In connection with the merger with Liberty, TripAdvisor Holidays, or L-Trib announced in December of 2024, we loaned L-Trib approximately 327 million for the redemption of its exchangeable debentures.
Matt Goldberg: Total cash and cash equivalents at quarter end included these activities was $1.2 billion.
Matt Goldberg: Subsequent to the quarters end, we close the L-trip merger. As a result, we retired approximately 27 million shares.
Matt Goldberg: Issued approximately 3 million shares and paid 42 and a half million in cash to the L-trip preferred stock shareholders and 20 million in cash to the L-trip common shareholders.
Matt Goldberg: In addition, we cancelled the loan to Altrupp that was used to redeem the exchangeable debentures as a just-no-dent.
Matt Goldberg: The net reduction in shares is approximately 23.8 million or approximately 17% of shares.
Matt Goldberg: Total cash outflow is approximately 393 million with the majority of us being paid in Q1 and the remainder to be paid in Q2.
Matt Goldberg: Post-transaction and post-paydown of our convertible notes, cash balance is expected to be approximately 700 million, which includes our deferred merchant payables of 365 million at March 31st, 2025.
Matt Goldberg: Now that we have closed the Liberty TripAdvisor Transaction, we will restart our share repurchase program under our existing authorization, which has about 200 million remaining.
Matt Goldberg: We will pursue a more structured approach going forward with a target of maintaining our current cash profile and net leverage levels which we believe is the right approach given our operating needs and considering the current macro environment.
Matt Goldberg: This implies we will utilize a portion of our future cash flow to repurchase shares as we see attractive prices in the market and a stable macro environment.
Matt Goldberg: Now I would like to turn to recent trends and our outlook for Q2 in the full year.
Matt Goldberg: We've continued to see stable demand trends in April and our guidance for the quarter largely assumes these trends continue.
Matt Goldberg: However, we recognize that the macroeconomic environment has become more uncertain, which could negatively impact our business. We will continue to monitor the travel environment for any changes.
Matt Goldberg: Starting with our second quarter outlook, we expect consolidated revenue growth of between 5 and 8 percent in the adjusted EBITDA margin of approximately 16 to 18 percent.
Matt Goldberg: Advitor, we expect mid-teens growth in the number of experiences booked, revenue growth of approximately 9-11% and adjusted EBITDA margin in the mid-to-high single digits.
Matt Goldberg: This revenue growth rate assumes a prudent assumption on pricing and cancel rates given some of the recent trends we're monitoring as per Matt's earlier comments.
Matt Goldberg: At Brandt TripAdvisor, we expect a sequential improvement in revenue of flat to 2% declines year-to-year and adjusted EBITDA margins of approximately 26 to 28%.
Matt Goldberg: At the fork, we expect revenue growth to accelerate sequentially to 26% to 28%, which includes approximately 6 percentage points of currency benefit at current rates.
Matt Goldberg: We expect the Justin Vida margin to pick up sequentially to approximately mid-teens.
Turning to the full year.
Matt Goldberg: We are pleased with Q1 performance and Q2 is off to a sound start.
Matt Goldberg: However, we believe is premature to adjust our full year guidance at this time, given the uncertain macroeconomic environment. Therefore, we are maintaining our consolidated full year guidance provided last quarter, which was 5-7% revenue growth and 16-18% adjusted EBITDA margin.
Matt Goldberg: With that, I'll turn the call back to the operator, begin Q&A.
[inaudible]
Speaker Change: Thank you. As a reminder to ask a question, you will need to press star 1-1 and wait for your name to be announced. Please stand by while we compile the Q&A roster.
Thank you. Bye.
Speaker Change: Your first question comes from the line of Richard Clarke of Bernstein. Richard, please go ahead.
Richard Clark: If you weren't seeing this macro uncertainty based on what you've seen in Q1 and Q2, is it fair to say that you would have been happy to take it up? But you're just maintaining it because of this macro uncertainty.
Richard Clark: and then secondly, you've completed the Liberty buyout, you've completed the shift in the Vada, you know, over the next 12 months, what is this unlock, like what can we expect to be changed, given this change instructor?
Yeah.
Richard Clark: Hey, Richard, it's Mike, I'll take the first one. Yeah, I think a few things. Like I said, in the call, we're happy with Q1. We're happy with the way Q2 has started. We feel, but we do recognize there is a bit more macro uncertainty. You know, I think we feel comfortable with our guidance framework that we presented last quarter. [inaudible]
Richard Clark: which is for the consolidated growth rates and margin profile. You know, I think as we move through the year, they're certainly put in takes with that. We see more progression at branch of advisor with with a positive pricing that we talked about.
You know, a viator, we expect to see continued.
Strong Unit Growth [inaudible]
Richard Clark: We're monitoring the impact, some impacts on revenue, some of the pricing we mentioned and the mix mentioned on the average booking value, which is a good thing.
Richard Clark: from that mixed perspective. But we're also monitoring some cancel rates and how that could impact...
Richard Clark: that could impact revenue as well. And so we feel we still feel good that where we are from a consolidated basis that that range feels appropriate in the background in the macro background.
Speaker Change: And Richard, thanks. I'll take that second question. You know with El Trip behind us, I think there's a few things here.
Speaker Change: Our capital structure is just much cleaner and simplified. We remove that notion of an overhang and the distraction that we've had as we've tried to work through that over the last year.
I think we are very focused on aligning directly.
Speaker Change: with all of our shareholders, and we'll continue to have robust shareholder engagement.
Speaker Change: You know, I think we have a real opportunity to simplify our story. It's been too complex in the past.
Speaker Change: and I'm really starting to focus very clearly on where we see the value drivers ahead. When I hit that across every part of our business, as we shift to marketplaces that are performing much better as we continue on the transformation journey that's stabilizing, TripAdvisor and our hotel category, we feel really good about how that's going. The AI story is one that we are really leaning into to find the ways that we can position ourselves for the future and learn and be ready to create the value as we see that coming
Speaker Change: John Ward. And then of course, you know, we're doing some things around, you know, governance. We have a new lead independent director. We're going to do some board renewal, which we think will be really helpful as we go forward. And we're just really excited about the flexibility that it provides us to focus and catalyze value.
Great. Thank you.
Speaker Change: The next question comes from the line of Ben Miller of Goldman Sachs. Ben, please go ahead.
Ben Miller: Great, thanks so much for taking the questions. I want to talk about via tour margins and you had some nice marketing leverage.
Ben Miller: there in the quarter. I'm curious, in your long-term margin framework.
Speaker Change: for Vieter, I think you've said OTA-like margins. I'm just curious what's contemplated there between kind of where you can drive marketing leverage from here, especially compared to global OTAs versus any kind of incremental fixed cost leverage that you see.
Speaker Change: Yeah, hey, Ben, it's Mike. I'll take that. Yeah, we reiterate our view that we believe this business can't have OTA like margins as we continue to scale. The biggest thing to the margin achievement is exactly what the teams are focused on this year and moving into next year, which is really product-led growth.
Speaker Change: and that is all things around tunnel conversion, the UX, commercialization, etc.
which we believe we can drive.
growth more efficiently.
with our more $10 as we improve conversion rates.
Speaker Change: So that is going to be the biggest driver of how we think about that margin increase. Now we will be, as I said, in this year is a trade-off a bit of, you know, continue to see expected to see marketing leverage.
Speaker Change: But we are investing in some of the fixed costs, particularly in personnel
Speaker Change: Hiring Engineers, Data Scientists, etc., to work on the product innovation. So there's a bit of a trade-off in the PNL you'll see this year, but just longer term, it's all about getting those conversion rates up and enhancing that user experience that we believe translates into that leverage of a time. [inaudible]
Speaker Change: And the only thing I would add, Ben, is just think about marketing efficiency, working with product, really driving, conversion, loyalty, repeat, direct into the aft, and then supply in the way that we're looking at expanding our supply. That becomes a flywheel that drives this whole thing and I think really drives both unit economics and that margin profile over time.
Speaker Change: Graham, just a follow-up to that. I'm curious if you can talk about your exposure to cross-border at Viator and in a world where you might see software cross-border and or shorter booking windows. Are there any adjustments that you might make around marketing spend either in who you're targeting or which channel you decide to deploy dollars in? Thanks so much.
Speaker Change: Yeah, thanks, Ben. Yeah, I would say, you know, Viator predominantly is a North American Booker base.
Speaker Change: So, I think we are maybe less susceptible to some of these international trade route pressures that I think have been highlighted across many people's calls.
Speaker Change: and that doesn't mean we're immune, but I would say we're probably less pressured from that. We continue to see, as I said, as we said in the call, the North America Booker Market continues to be healthy.
Speaker Change: They continue to travel internationally as well domestically, and so we are able to capture a lot of that. Yeah, just the depth of supply, the fact that we have all that supply really allows us to pick up on wherever anybody wants to go. And we know, we thought during the pandemic as people were maybe less focused on Europe and more focused on US to US. We picked that up. It was a real road driver for us and we think our supply will allow us to pick up wherever they go and at whatever price point. That's one of the benefits.
of having the most scale to apply in the business. [inaudible]
One moment for your next question.
Thank you.
Speaker Change: The next question comes from the line of Naved Khan of B. Riley. Naved, please go ahead.
Great. Thank you very much. Two questions please. One on Mr.
The
Speaker Change: Changes that Google seems to have made in recent months on its auctions for activities and experiences.
Speaker Change: That seemed to be favoring more of the operators. Are you seeing any impact of their active positive or negative or? [inaudible]
Speaker Change: You know, any commentary would be helpful. And then the second question I have is on the average booking value.
Speaker Change: It was lower year on year and I'm wondering if that's a reflection of the customers choosing lower price experiences to book or simply the mix of listings might have changed and that's kind of getting accepted in the price here.
Speaker Change: I don't think anything surprises us that happens in the Google surf for experiences. They're going to continue to...
Speaker Change: experiment with different ad placements and how they try to get different people involved in their-
in their marketing platforms.
Speaker Change: That is expected. We will continue to be active and are involved.
in how we experiment and benefit for Mose. [inaudible]
Speaker Change: They continue to add different ad formats which you know we are actively involved in. So listen I think it's this continued opportunities for us and the team to be very nimble.
Speaker Change: Think about, and we think about how exactly we play in that environment, how we utilize.
Speaker Change: Those different ad formats who find highly incremental and converting traffic and will continue to do so. So it's a bit of our continued optimization efforts around all things Google.
Speaker Change: and then on ABV, ABV, which is the average, is a function or measure of price.
Speaker Change: in our business. We have seen some pressure on ABV. That is predominantly a result of our third party mix as I mentioned growing faster.
Speaker Change: Our third party mix, which includes OTAs and others like travel agents and white labels, generally books at lower price categories, and that's what is driving, predominantly driving that pricing pressure.
Speaker Change: On the margin, we see some very small increase in lower price categories but very negligible thus far, and so really, Naved, it's really a mixed issue.
and again, this is just a double click on this. [inaudible]
Speaker Change: This is an area of focus for us. We have been focusing on how we serve particularly the OTAs in a more effective manner and we are investing behind this.
Speaker Change: So this is a good outcome from us. This, as I said in the call, this is highly incremental traffic in regions that we generally are not strong in. And so, again, that revenue, these units are very incremental, and they're very profitable. They're profitable day one for us.
So, again, these are, this mix will create some pressure on price.
It's very much one that we feel good about.
Speaker Change: And the only out-ad is that as you look at the consumer demand across ABV segments, higher ABV items seem to be holding up well thus far. It's something we're obviously watching to understand what kind of bifurcation there could be, but higher ABV items are holding up well.
Thanks, Fred. Thanks, Mike.
Yeah.
One moment for your next question.
Speaker Change: The next question comes from the line of Doug Anmouth of JP Morgan, Doug, please go ahead.
Speaker Change: Hi, this is Dae Lee, I'm for that. Thanks for taking the questions. First one, could you expand on your comment about?
How trouble would do in a slower consumer environment?
[inaudible]
Speaker Change: Yes, sure. I think the point is a general one which is that we know over the long course of history that when the economy slows the consumer has to make important choices that when their personal finances get pressured they will choose. As I said, they have been largely defending travel as a category and especially experiences and that's what we've seen. Travel demand has been healthy in Q1 and through April . I mentioned that we saw some shifts similar to what
Speaker Change: and others have said in the industry and we're watching our data very closely for leading indicators.
But we don't see any.
You know, experiences volume growth remains healthy, as I said.
Speaker Change: and while it's too early for me with my crystal ball,
Speaker Change: to say to you what I think is going to happen. I want to recognize what we've seen historically and also give color to the fact that what seems to be happening is that the consumer wants to travel is defending the category and leaning into experiences. And that's what they're telling us. They are planning travel this summer, which is on par as they did last year.
Speaker Change: It can be a little bit stronger sometimes than those surveys with higher income travelers, so we're watching that, and we're certainly seeing resilience in high value cohorts which have been durable and increasingly and it has been consistent.
Speaker Change: that travelers will say their prioritizing experiences in their budget and they're planning to book more experiences. That is up from last year. People who are planning to book three or more experiences this summer is growing over last year.
Speaker Change: So, you know, we think we're in a really good spot both as it relates to the experiences.
Speaker Change: The inventory we have to offer at every price point in whatever destination people are going to and we certainly feel good about our ability to serve people as they think about, you know, thinking about choosing on price. So we feel really good about our setup.
Speaker Change: Cut, that's good to hear. And then, secondly, on Brian TripAdvisor, you talked about favorable pricing on at Hotel Meta. I'm just wanting to see if you can expand on the drivers of that improvement and how you expect pricing to trend for the rest of the year.
Speaker Change: Yeah, this is a really exciting one for us because we've been talking a lot about how this transformation is going and I think what we've said is, we started by putting our teams against the strategy, deliver product work, leveraging AI, thinking across every category and all the surfaces. And what we're seeing now is that that product evolution is really not only driving, excuse me, engagement but it started to translate into monetization.
Speaker Change: I think we can scale. So what we did here was we improved our hotel user experience.
Speaker Change: and we looked at, you know, in the past they would come and we would quickly try to get them off site. What we're doing now is we've added more information, more content, more context.
Speaker Change: So that they can really think through what they're looking for in that choice around accommodation and what that's driven is a pricing uplift in the auction and an ability to further engage before we send them into that into into meta to to monetize the new ways to cross sell as they're moving through that funnel.
Speaker Change: And so we see that as a very good proof point.
Speaker Change: of our engagement strategy delivering a monetization opportunity that we can scale. Now, what this does is it helps us think about how we will stabilize the hotel category.
Speaker Change: and then we can think about these product improvements in other areas that will drive growth like the app where we launched a whole new set of features in our experiences funnel which can work in good compatibility with hotel booking and that whole experience of booking hotels and experiences and ultimately restaurants.
Speaker Change: We think will be a real driver ahead, and that's why we gave you the color that we are progressing quarter by quarter and expect and the year in a growth opportunity with TripAdvisor.
Got it. Thank you.
One moment for your next question.
Trevor Young: The next question comes from the line of Trevor Young of Berkeley. Trevor please go ahead.
Speaker Change: Great, thank you for the questions. You said a few times now that third party distribution is highly incremental and also I think immediately profitable, so some favorable characteristics there.
Speaker Change: But at the same time, that doesn't really help via to or build its brand awareness.
Speaker Change: How do we think about that trade-off, particularly as, you know, booking is now getting a little more aggressive in the category, calling it out for the first time this quarter, and quite a few quarters, and also Airbnb relaunching, and can you also size how meaningful the large OTAs are in terms of? [inaudible]
Distribution Provietor
Speaker Change: Yeah, hey Trevor, I'll take that. So yeah, I think the main point is that these are highly incremental for us and large the outside of our key source markets.
Speaker Change: You know, and there is an element of branding that we get and just depending on different partner relationships.
Speaker Change: So listen, I think this provides good economics for us. It allows us to fuel scaling.
Speaker Change: It is part of our strategy as we think becoming a real experiences platform and you know I think we're always going to be unique and different being a focused OTA on experiences rather relative to other OTAs that are obviously selling many many different products.
and Services within the travel, within the travel scale.
Speaker Change: The Viator point of sale is by far our largest channel.
Speaker Change: Still. And so that is obviously the focus of how we-
Gain and Attract. [inaudible]
Speaker Change: Customers, and as I said in prepared remarks, we continue to see very good cohort behavior around repeats and loyalty, which we're very pleased with. So, we think this is additive and we think it helps us continue to scale and become that platform.
Speaker Change: Yeah, it's additive and it's profitable and it allows us to invest and get the flywheel going and I would just say as we work with those third parties, it's a good way to bring the largely offline audience.
Mike Noonan: Online, and then we benefit from that, not only with the incremental piece round third party, but then the ability to serve them as Mike said, a very focused OTA with
Mike Noonan: Distinct advantages as a vertical focus versus the horizontal focus that others might have and you know the large supply base that we have the highest scale really allows us to do it and allows us to be in front of travelers wherever they are as they come online. So I think that's an exciting growth opportunity ahead.
Speaker Change: That makes a lot of sense. Thanks for that. Second question, you've obviously inked new AI partnerships and several prior partnerships we've already kicked off. What are maybe two or three of the key learning so far from some of those partnerships? Realizing it's still very early days, but just anything you can share with us would be helpful.
Speaker Change: Yeah, yeah, sure, and we're really it's a phase in AI where we know how important this is we were
Speaker Change: Early and thoughtful about doing a lot with our product and clearly putting it into the productivity of our company, we looked at partnerships as an opportunity to really choose the AI leaders in the ecosystem that we wanted to learn from.
Speaker Change: So with perplexity, you know, it puts us in a position to really understand what's happening with AI first search.
Speaker Change: and we've got great content to attract high-intent traffic with an opportunity to drive hotel and experiences bookings and the learning is how we optimize in an LLM-based SEO environment.
Speaker Change: to really reimagine our user experience and to think about how we're going to drive value through a kind of combination across licensing, incremental traffic, putting our products in front of these high intent travelers and then ultimately direct booking revenue. [inaudible]
Speaker Change: You know, with OpenAI, we're experimenting there with OpenAI operator. We really want to understand.
Speaker Change: and set the foundation for what a gentick AI could become and how it may redefine trip planning and booking. It's very early there. The consumer is still looking at it and studying and trying to understand it. But we're deepening our partnership there and we think a traffic-based value exchange with some licensing involved allows us not only to begin to monetize, but then to learn how to adapt our products for these opportunities for the future and what the behavior of these audiences are going to be.
Lee. And by the way, some of these audiences can be higher in 10th and average.
Speaker Change: You know, Alexa with Amazon was really about elevating the TripAdvisor branding content in a voice-activated AI interface, so we really want to understand where multimodal is going around voice and images and ultimately video, and we want to understand the cross-platform user experience and how our content can be leveraged. And then I mentioned to Microsoft Azure, you know, here we're serving as an anchor data provider in a paid AI marketplace.
Speaker Change: and that allows us to learn about how our data is valued and by whom and for what? And I think that will put us in a tremendous advantage. It's all about laying the foundation so that when we see things that are working, we can move very quickly to create value where it gets created in.
I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry
Great. Thank you.
Thank you very much.
One more with the next question.
Speaker Change: The next question comes from the line of Jed Kelly of Oppen and Jed, please go ahead.
Jed Kelly: Hey, great. Thanks for taking my question. It's just going back to Viator and doing everything you're seeing in the US.
Jed Kelly: Any shift on how you're thinking about marketing by a tour this year, given what's going on in the U.S.
Jed Kelly: and some of the competition. And then I appreciate the commentary on completing the Liberty TripAdvisor merger. Can you give us what we should be expecting for a diluted share cow at your end if you can? Thank you.
Jed Kelly: Yeah, Jed, I'll take the first one on the marking shift, so I would say...
Jed Kelly: We're really not thinking about different ways of how we are approaching market and vital, other than what we've been talked about for some time, which is...
Jed Kelly: You go where, go where converting demand is and convert that as best that we possibly can.
to give that user a great experience, great choice.
Get them to block.
Jed Kelly: and then give them really, really great customer service and follow back up with them. And then once we have them, have an experience.
Jed Kelly: You know, continue to utilize that relationship going forward, hence the repeat business. So that is in the most basic way, in the most basic way.
Jed Kelly: that the marketing flywheel we're working. And a key part of that will be, as I said before, the marketing, I mean our product led piece of that. So in that flywheel, talking about how we increase conversion and how we get that user to come on and convert more effectively. [inaudible]
Jed Kelly: The only thing I would add to that, Jed, is that, you know, with a focus on marketing efficiency, we do think cross channel.
Jed Kelly: We are being very careful as we measure and think about what will drive our unit economics to make sure that our performance marketing is effective as it can be. And we're also looking at testing how we can optimize the role of each brand in our marketing approach and how we work across those two brands to drive meaningful incremental uplift for the group, which I think is really exciting and we'll probably have an opportunity to say more ahead.
Jed Kelly: and so that probably comes along with thinking about where our brand spend goes and adjusting that. But it just leads to better marketing efficiency, better coordination and I think better outcomes.
Jed Kelly: And Jed is on the technical point on shares. So we have prior to the transaction about 142 million shares outstanding. We're retiring again as said to 23.8. So we'll have about 118 million shares outstanding post transaction.
Thank you.
Yep.
One moment, the next question.
Speaker Change: The next question comes from the line of Kevin Kopelman of TD Cowan. Kevin, please go ahead.
Kevin Kopelman: Thanks a lot. I just had a follow-up on Jed's question really. Could you dig in a little bit more on?
Kevin Kopelman: on the viator marketing in Q1 because it was flat year-over-year and that was pretty surprising.
Speaker Change: and can you confirm if the third party brevshare is in the marketing line that I think it is? But yeah, just any more color on how you're able to keep that flat year over year given, I think, 15% volume growth. Thanks.
Speaker Change: Yeah, it just looks like continued progression in that and as we think about different mixes of that, Kevin.
Speaker Change: I would say, last year, we're probably, we were lapping, you know, a larger-
Speaker Change: Brand campaign, and Q1 of last year that we were a bit more modest on this year, and so that was a big driver of that leverage, but it just goes to show it comes back to what we just talked about, you know, through efficiency through our pay channels.
Speaker Change: continues to be very consistent and will be our primary way that we attract, acquire and get people to come back to us directly is our main flywheel for that.
Speaker Change: And could you confirm if the third-party revshare is in that marketing line?
No, well...
Speaker Change: It's a great question. There are many different relationships in third party. It's not just like the OTAs. Again, we have affiliates.
Speaker Change: We have White label, we have, you know, travel agents. The majority of that would not be through that marketing because in certain cases it's more like a supply cost, a supply
Speaker Change: Okay, so it would be in cost of revenue in the other cases for the most part.
It just netted out of revenue. That's right.
Okay, like I can't take it anymore.
Speaker Change: Yeah, not necessarily controversy, just kind of in. Yeah, exactly. It sounds like that wasn't really the
I'm sorry.
Speaker Change: Go ahead, go ahead. It sounds like that wasn't really a big driver year for you necessarily though. I've changed.
Speaker Change: Inefficiency? No, that's correct. That's great. Thank you very much. If that was the answer, there's a question that was not a driver of efficiency.
Thank you very much.
Yeah, for sure.
Speaker Change: The next question comes from the line of Tom White of D.A. David Sinnington. Tom, please go ahead.
Tom White: Great, thanks for taking my question. Maybe just one follow-up on the earlier AI-1. I think it's my thanks for the color on the initial partnerships.
Tom White: Can you maybe talk a little bit about the biggest opportunity you see to incorporate AI into your own consumer facing experiences?
Conversion, repeat, and loyalty.
and it's happening all across the business.
Tom White: They're using it at the world-class customer service for booking assist and post-booking communications. It's also being used in marketing to enhance creative and their performance bidding. We talked a lot about TripAdvisor and AI driving engagement and increasingly early monetization gains that we plan to scale. We started with Gen AI trip planning and personalized trip planning recommendations that is getting better and better and better and growing very rapidly.
Tom White: I'll be it on a small base and it's going to become highly integrated into the UX.
Tom White: We brought on an AI travel assistant on top of that. You could see how those could come together and even in an agentic way. And then of course, we've been using Jenny across all categories to make sure that people can engage with our review summaries and over time.
Tom White: What that'll mean is the most personalized recommendation platform available anywhere because-
Tom White: The size of our audience and all that data that we have, and the size of our content asset and how relevant it is. And you can imagine how that we know more about travelers than anybody else, and we're able to make it feel magical the way that we understand what you're looking for. It's very early days on that, but we're really excited how that's progressing. And the fork, of course, is using AI as well in a continuous innovation agenda on the B2C side. It's all about discovery and matching and conversion. On the B2B side,
Tom White: You know, they're using a Genticae Eye to expand their restaurant selection and book off platform and of course to drive service quality and efficiency and so it's really being used everywhere and the exciting part is I think our culture is shifting. [inaudible]
Tom White: The people in our company are excited about this. We've given them all the tools to experiment every day and I think this is just getting started and we will see real tailwinds from that work.
Thank you.
One moment for your last question.
Speaker Change: The last question comes from the line of John Colantoni of Jeffries. John , please go ahead.
Speaker Change: Good morning, this is Chris on Prajon. Thanks for taking my question. I wanted to ask about take-rate a viator. It seems like revenue and gross bookings have been growing kind of roughly in line over the last few quarters, but prior to that there was some noticeable take-rate expansion. So I know there might be some holiday timing factors in there. Can you give us a censor what's going on with underlying take-rate and where you think it could ultimately go over time?
Yeah.
Speaker Change: Yeah, hey Chris, great question. So, again, the applied take-rate that you may see, you know, revenue divided by gross bookings obviously, that's going to fluctuate. It's going to be based on, it's going to be very different because of timing.
Speaker Change: and the book to travel window, as you well aware. I would say, in which is your real question, underlying take rates have been very stable, right? And an average have been in the mid-twenties percent, as we've said before.
Speaker Change: which we believe is reflective of the high value that we provide to our suppliers.
Speaker Change: The demand that we give them and really just being good partners with that. A lot of the take rate, again, we've talked about this from time to time, has driven driven by our partners signing up for certain programs to pay higher take rates.
so that they get more privileged advertising in our surfaces.
Speaker Change: So again, again, demonstrating the value of that. So we're very happy with where take rates are today. We're always trying to strike the right balance of value we provide for our operators.
Speaker Change: We don't necessarily see expect or need take rate to continue to go higher. Again, we are really focused on the right value for our operators and give them a just incredible service and value. And so that's what we're focused on.
Again, third party is many things. It's travel agents, it's OTAs.
Speaker Change: It's White Label, OTA has been driving the growth within 3P.
Speaker Change: Those do carry a lower implied take rate, and that is still reflective in our overall take rates in the mid-20s, so that is with it in there. But again, a third party, highly incremental and very profitable from an EBITDA margin perspective, which is the key.
Thank you.
Thanks very much
Yeah, thanks Chris.
Speaker Change: This concludes the question and the session. I would now like to turn it back to Matt Goldberg with your mind.
Speaker Change: Thanks everyone for joining us on this morning's call. We're really excited about our plans for the year and I just want to take a minute to thank all of our teams.
Speaker Change: for their relentless focus and execution. It really matters and it's making a difference.
Speaker Change: We've made significant progress in our segment strategies and on our group-wide collaboration and we're looking forward to the opportunities ahead as we continue to build out our position across experiences and travel and we'll see you at the next update. We'll see you at the next update.
Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Thank you.
[inaudible]
Speaker Change: This is a production of the Center for Autism and Related Disorders The Center for Autism and Related Disorders is a non-profit organization based in the U.S. Autism is a common theme in the U.S. Autism is a common theme in the U.S. The Center for Autism and Related Disorders
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