) shares were down more than 1% in after-hours trading Tuesday
after the provider of travel reviews and related content issued
Q1 results that beat earnings and sales forecasts on a strong
double-digit jump in click-based ads. Investors seemed miffed by
revenue impact of the company's shift to a metasearch business
model in the quarter, despite the sales surge.
The shares closed regular trading at 55.
For the first quarter, TripAdvisor said Q1 sales surged
25% from a year earlier to $229.9 million, beating analysts
forecasts of $224.29 million. Sales were up 36%
The Newton, Mass.-based company said it earned 43 cents a
share on a GAAP basis, up 23% from 35 cents in the year-earlier
period and 4 cents above the 39 cents GAAP-based average estimate
of 22 analysts polled by Thomson Reuters.
On a non-GAAP basis, TripAdvisor said it earned 50 cents a
share, up 31.6% from a year earlier, and 4 cents above analyst
views of 46 cents.
"Our underlying fundamentals are indeed very strong,"
TripAdvisor CEO Steve Kaufer said in a conference call with
analysts after the results were issued. The company, citing
tracker Google Analytics, said it averaged more than 200 million
monthly unique visitors in Q1. TripAdvisor says this continues to
make it the largest travel website in the world based on unique
Revenue from cost per click or CPC ads in Q1 surged 24% from a
year earlier and made up 78% of total revenue. Display-based ad
revenue jumped 14%, making up 11% of total revenue. Subscription
and other revenue surged 51%, accounting for 11% of total
CPC is an online ad model used to direct traffic to websites.
Advertisers pay website owners when an ad is clicked.
The company didn't issue a formal outlook for the current
quarter. But CFO Julie Bradley reiterated company guidance for
full-year 2013 revenue growth "in the low 20s" on the call.
North American revenue in Q1 totaled $121.5 million and
represented 53% of total revenue; revenue from Europe, the Middle
East and Africa totaled $71.3 million, representing 31% of Q1
revenue; revenue from Asia-Pacific totaled $26.9 million,
representing 12% of total Q1 revenue; and Latin America revenue
totaled $10.2 million in Q1, representing 4% of total
Related-party revenue from Expedia rose 17% to $60.5 million
in Q1, representing an increase of $8.9 million. JPMorgan says
this is the most Expedia has ever spent with TripAdvisor in a
TripAdvisor was spun off from Web travel companyExpedia (
) in an IPO in December 2011.
TripAdvisor is currently shifting to a metasearch business
model or a price search tool that generates revenue by allowing
users to book hotels and other travel products directly. This is
expected to take the emphasis off CPC advertising from hotels and
online travel agencies.
But some analysts have been worried that this could disrupt
revenue flow since such comparison shopping will take place on
TripAdvisor and fewer CPC leads will be sent to advertisers.
CFO Bradley said on the call that Q1 revenue was "negatively
impacted by 3% to 5%" because of the shift to metasearch. "We
expect this negative impact will be greater in Q2 and will
improve in the back half of the year as we get to revenue
neutrality" by the end of the year, she added.
JPMorgan analyst Doug Anmuth in a pre-earnings note on May 6
that the switch to metasearch is "positive" for TripAdvisor's
user experience and will "lead to higher conversions and
increased pricing over time." But Anmuth also says that with
shares trading near all-time highs, investors may not react well
to "near-term dislocations in revenue or costs due to the
Piper Jaffray analyst Mike Olson said in an email interview
before the results were issued that TripAdvisor's Q1 performance
was buoyed by increased marketing outlays by Expedia andPriceline
) in the quarter.
"In fact, during Q1, Expedia's spending on TripAdvisor grew
20% year-on-year after 4% in 2012," Olson said.
Long term, Olson says TripAdvisor also is well-poised to
benefit from global growth in online travel advertising. He notes
that online travel represents 30% to 40% of worldwide travel
bookings, but that only 16% of the $40 billion spent annually on
travel ads is online.