- Growth in hotel shoppers and increase in international
traffic led to a 20% increase in 2012 revenues and a 23% y-o-y
increase in Q4 2012 revenues.
- Traffic on TripAdvisor increased by 45% y-o-y. We
estimate the user base to further expand in the future.
- More than 30% growth in hotel shoppers led to a 24% y-o-y
increase in click-based revenues.
- With more than 75% growth in traffic, Asia-Pacific was one
of the fastest growing markets.
- Increasing investment in social & mobile platforms
increase traffic flow for TripAdvisor.
Backed by robust growth in hotel shoppers and an expanding
international user base, leading online platform for travel reviews
) marked a 20% increase in its 2012 revenues. Despite macro
headwinds and increasing long-term investment, TripAdvisor's
Q4 2012 revenue and net income witnessed 23% and 40% y-o-y growth,
Following its spin-off from online travel
agency Expedia (
) in December 2011, TripAdvisor witnessed rapid top-line growth
every quarter. Rising traffic, a strong member base and
increasing content across its growing global footprint
have helped the company perform well.
While there are certain factors that can limit growth in 2013
such as a mix shift towards international markets, increasing hotel
shoppers on mobile devices and lower click-based pricing, we
believe that TripAdvisor is well-positioned to continue expanding
its business in the future.
See our complete analysis for TripAdvisor's
TripAdvisor's business model is primarily driven by the number
of unique visitors to its website and thus an increase in the
number of visitors in an important indicator of its future
growth. According to comScore, TripAdvisor's travel community
averaged more than 57 million monthly unique visitors in Q3 2o12
and the number increased by approximately 45% in Q4 2012.
As TripAdvisor continues to develop its social and mobile
platforms, focuses on international expansion and targets
higher hotel shopper growth, we believe it will continue to
register growth in its user base for years to come.
Increasing Hotel Shoppers Fuel Click-Based
The number of hotel shoppers on TripAdvisor's websites and
mobile platforms increased by more than 30% y-o-y, which led to a
24% y-o-y increase in click-based advertising in Q4 2012. For the
full year 2012, an increase in hotel searches contributed to 20%
revenue growth, 18% click-based revenue growth, and 9% adjusted
Advertising revenue, which primarily consists of click-based
advertising, contributes over 84% to TripAdvisor's valuation, as
per our estimates. As TripAdvisor targets growth outside the US, we
feel that it can witness higher growth in hotel shoppers as the
hotel industry in the international markets offer better
growth opportunities compared to the US market which is
TripAdvisor claims to be witnessing continuous growth in
international hotel shoppers and better y-o-y pricing. We estimate
the trend to continue in 2013 as well.
Strong Growth In Global Traffic
Increasing international expansion was an important factor
leading to a robust increase in traffic on TripAdvisor's website.
With more than 75% increase in traffic, Asia-Pacific was one of the
fastest growing markets for the company. Though the US and the UK
are relatively mature markets, TripAdvisor claims to be witnessing
healthy growth from these regions which implies that there is still
room left to grow here.
Over 60% of TripAdvisor's traffic originates from outside its
core markets of the US and the UK. In 2013, the company
intends to focus on enhancing the TripAdvisor brand image in the
emerging markets by incorporating more local language content to
drive higher user engagement.
TripAdvisor offers its content in 21 different languages with
more than 60 contributions per minute, which equates to over 30
million contributions in a single year.
Increasing Investment In Social & Mobile Platforms To
Enhance Brand Awareness
With the rapid changes in global technology, it is important for
online travel companies to stay in line with changing consumer
preferences. Leveraging growth in social platforms and the rapidly
expanding mobile user base remain key priorities for TripAdvisor's
long-term growth strategy.
In 2012, TripAdvisor managed to more than double
the members acquired through Facebook (
). At 44 million, its marketable members increased by almost 100%
y-o-y. With over 32 million logged-in Facebook users,
TripAdvisor's Facebook app reached the number one spot in terms of
monthly active users in Q4 2012 and was the only travel app in the
top 20 applications. Presently, 35% of TripAdvisor's new reviews
are derived from its Facebook connected members.
As of Q4 2012, TripAdvisor had around 45 million monthly
unique mobile device visitors, a y-o-y increase of 190%. At the end
of the quarter, it reached over 31 million cumulative smartphone
and tablet application downloads for the TripAdvisor
application. Additionally, the company launched 20 news free
City Guides across iOS and Android which increases its coverage to
During Q4, TripAdvisor worked on improving its smartphone user
interface and introduced a new meta-display for smartphone traffic.
While smartphones currently account for less than 5%
of TripAdvisor's click-based revenues, tablet accounts
for approximately 10%-15% of revenues. We expect the proportion to
increase in the future.
Targeting the mobile space and social media, TripAdvisor has
been focusing on expanding its avenues to increase penetration and
making its platform more accessible to users. We expect both media
to contribute significantly toward increasing traffic on
- Total revenue and click-based revenue to increase by more than
20% (lower 20s).
- D&A and capex to be in line with 2012 figures.
- Stock-based compensation to increase marginally: 6% of
- Effective tax rate to be in the mid-to-high 20s range on
account of increasing benefit from international
We will update
our price estimate of $37.89 for TripAdvisor
soon to incorporate the Q4 2012 earnings results.
How a Company's Products Impact its Stock Price at Trefis