TripAdvisor, Inc. (TRIP)

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TripAdvisor, Inc. (TRIP)

Q4 2012 Earnings Conference Call

February 13, 2013 17:00 ET


Will Lyons - Senior Director, Investor Relations

Steve Kaufer - Chief Executive Officer

Julie Bradley - Chief Financial Officer


Lloyd Walmsley - Deutsche Bank

Nat Schindler - Bank of America Merrill Lynch

Mark Mahaney - RBC

Scott Devitt - Morgan Stanley

Tom White - Macquarie

Laura Martin - Needham & Company

Mike Olson - Piper Jaffray

Peter Stabler - Wells Fargo Securities

Dough Anmuth - JPMorgan

Brian Nowak - Nomura

Brian Fitzgerald - Jefferies

Kevin Kopelman - Cowen & Company



Good day, ladies and gentlemen, and welcome to the TripAdvisor Fourth Quarter and Year End 2012 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this call may be recorded.

I would now like to introduce your host for today’s conference, Mr. Will Lyons. You may begin.

Will Lyons

Thanks, Ashley. Good afternoon, everyone and welcome to TripAdvisor’s fourth quarter and year end 2012 earnings conference call. I am Will Lyons, Senior Director of Investor Relations for TripAdvisor. And joining me on the call today are our CEO, Steve Kaufer; and our CFO, Julie Bradley.

Before we begin, I’d like to remind you that the estimates and other forward-looking statements included in this call represent the company’s views as of today, February 13, 2013. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today’s earnings release and TripAdvisor’s filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. You will also find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on our call in our Q4 earnings release, which is available on our IR site, Finally, unless otherwise stated, all references to selling and marketing expense, general and administrative expense, and technology and content expense excludes stock-based compensation and all comparisons on this call will be against our results for the comparable period in 2011.

With that, I will now turn the call over to Steve.

Steve Kaufer

Thank you, Will and welcome everyone. The fourth quarter closed out a great 2012, a year in which we made wonderful progress along our growth initiatives. We grow strong member and content collection across our increasingly global footprint. We invested in our social and mobile offerings to enhance brand awareness. We laid the foundation for growth in our business listings and vacation rentals products and we continue to innovate the TripAdvisor platform for our users and customers alike.

For the quarter as expected, revenue and adjusted EBITDA growth accelerated growing 23% and 17% respectively. TripAdvisor hotel shoppers grew in the mid 30s driving 24% click-based revenue growth. For the year, over 30% hotel shopper growth drove 20% total revenue growth, 18% click-based revenue growth, and 9% adjusted EBITDA growth. Strong results in light of substantial revenue headwinds and our ongoing commitment to invest for the long-term. Julie will discuss our financials and outlook in more detail shortly.

On the consumer side, we are pleased to see continued strong traffic growth around the globe. Specifically according to our logs, total monthly unique visitors to TripAdvisor branded sites grew approximately 45% in the fourth quarter with Asia-Pacific leading the way at over 75% growth. Over 60% of our traffic originates from outside of the core U.S. and UK markets. In the 2013, we are focused on enhancing the TripAdvisor brands in these markets amassing more local language content to drive more user growth engagement.

While we continue to grow hotel shoppers fastest in newer international markets, we are also seeing healthy growth in the U.S. and UK despite their relative maturity showing that there is headroom even in our most established markets. As it relates to our social initiatives, according to app data, TripAdvisor’s Facebook app reached the number one spot in terms of monthly active users in late Q4 and was the only travel app in the top 20. During the year, we more than doubled our members acquired through Facebook helping us grow marketable members nearly 100% year-over-year to 44 million. Currently, 35% of our new reviews are coming from Facebook connected members and we are rapidly closing in on our 100 million reviews and opinions milestone.

Rich user-generated content is the lifeblood of our business and our travel community is on pace to adding more than 30 million contributions in 2013. In January, we e-mailed all 2012 contributors thanking them for their reviews, the photos, the room tips, the forum posts, all the things that make our site better and better everyday, leveraging social and community remain a key piece of our membership and brand growth strategy.

As it relates to our mobile initiatives, we greatly improved our smartphone user interface by rolling – by user experience by rolling a new meta-display to all smartphone traffic in Q4. We doubled our smartphone and tablet app downloads to more than 31 million and our 45 million average monthly mobile uniques in Q4 was up 190% year-over-year according to our log files. Additionally, we launched 20 news free City Guides across iOS and Android bringing our coverage to 80 cities.

To give you better sense for the mobile growth, we are experiencing over the past year TripAdvisor phone and tablet traffic have each doubled, each now accounting for approximately 10% to 15% of our sessions. Smartphones currently account for less than 5% of our click-based revenues, whereas tablet now accounts for approximately 10% to 15% of revenues. We don’t expect the phones monetization rate to improve materially in 2013, but we are okay with that given that it’s more of an in-market tool for travelers. We anticipate continued traffic in revenue growth on mobile devices in 2013 and enhancing our mobile presence remains a top strategic priority.

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