NASDAQ:TRVG trivago Q2 2024 Earnings Report $10.32 +0.51 (+5.15%) As of 09:40 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast First Northwest Bancorp EPS ResultsActual EPS-$0.01Consensus EPS -$0.01Beat/MissMet ExpectationsOne Year Ago EPS$0.10First Northwest Bancorp Revenue ResultsActual Revenue$127.62 millionExpected Revenue$127.25 millionBeat/MissBeat by +$370.00 thousandYoY Revenue GrowthN/AFirst Northwest Bancorp Announcement DetailsQuarterQ2 2024Date7/30/2024TimeAfter Market ClosesConference Call DateWednesday, July 31, 2024Conference Call Time8:15AM ETUpcoming EarningsFirst Northwest Bancorp's Q1 2025 earnings is scheduled for Thursday, April 24, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by First Northwest Bancorp Q2 2024 Earnings Call TranscriptProvided by QuartrJuly 31, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the trivago Q2 Earnings Call 2024. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. I must advise you the call is being recorded today, Wednesday, 31st July 2024. Speaker 100:00:27We are pleased Operator00:00:27to be joined on the call today by Ioannis Tomas, trivago's CEO and Managing Director and Robin Harris, trivago's CFO and Managing Director. The following discussion, including responses to your question, reflects management views as of today, Wednesday, July 31, 2024 only. Trivago does not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to the Q2 2024 operating and financial review and trivago's other filings with the SEC for information about factors which could cause trivago's actual results to differ materially from these forward looking statements. Operator00:01:09You will find reconciliations of non GAAP measures to the most comparable GAAP measure discussed in Trivago's rating and financial review, which is posted on trivago's Investor Relations website at ir. Trivago.com. You are encouraged to periodically visit trivago's Investor Relations website for important content. Finally, unless otherwise stated, all comparison on this call will be against the sole credit parable period of 2023. With that, let me turn the call over to Ioannis. Speaker 200:01:38Good morning, everyone. Thank you for joining our Q2 2024 earnings call. The Q2 of 2024 marks the 4th consecutive quarter with improved top line trajectory. We are pleased to see positive branded revenue growth in all three segments. Despite the challenges posed by Google's ad former changes, our branded revenue growth has largely offset the negative impact from performance marketing. Speaker 200:02:05These known headwinds will likely persist for the remainder of the year and should cease in early 2025. We remain confident that we can return to growth in the second half of the year. Now let's move on to our strategic priorities. Our first strategic priority is branded growth. We remain one of the most recognized travel brands in the and are pleased with the outcomes of our brand marketing campaigns in Q2. Speaker 200:02:34Our marketing teams continue to push boundaries. In the first half of twenty twenty four, our in house creative production team developed 6 new master sports for our TV campaign. These ads were tested live and the best performing creators were localized based on the impact in the market. Using AI, the team produced over 100 tailored TV spots, showcasing our unique capabilities to test assumptions and optimize campaigns across our segments. Our second strategic priority is to improve our hotel search experience. Speaker 200:03:07We aim to help travelers find their ideal hotel. We have expanded our AI powered hotel highlights to mobile and our app platforms. We have focused on improving quality and put particular focus on surfacing unique selling points of hotels through that feature. I'm also excited to share that since we arrived, we had the strongest quarter in terms of the number of experiments we run on our website. These incremental improvements have collectively led to tangible increase in conversion rate, which is our strongest proxy for user satisfaction and retention. Speaker 200:03:44This impact demonstrates the accelerated pace of execution and learning of our tech teams. Our 3rd strategic priority is to offer the best deal discovery experience. We strive to help travelers find great deals and better prices. We have improved the visibility and quality of deals in our search results. We experimented with new formats for highlighting deals and increased the coverage of member only rates from our advertising partners. Speaker 200:04:13These special rates offer additional savings and require users to sign up for trivago. Our 4th priority is to create value for our advertising partners. Compared to last year, we have seen improved booking conversion rates delivering more effective traffic to them. The improved marketplace dynamics across all segments suggest that our branded and higher converting traffic is valued by our advertisers. We are also excited to announce the completion of our global rollout of the 2nd price auction model in our marketplace. Speaker 200:04:48This complex project was delivered on time, thanks to the strong collaboration with our partners. I'm also pleased to share news about our investment in Hollisto. The company is an AI driven travel tech platform and serves as a hotel rate aggregator. In 2022, we partnered with them on Trivago Book and Go, a co branded booking funnel developed and hosted by Volisto. This initiative proved successful, increasing their conversion rates and growing their market share. Speaker 200:05:20In the U. S, they have become a top 5 advertiser on our Travagon Book and Go to all our advertising partners. Our goal is to provide a more consistent booking experience for our users and help our advertising partners to drive conversion. Volisto's footprint and rate optimization and price accuracy is best in class. The team is leveraging AI to optimize rate exposure and dynamic recent years. Speaker 200:06:02In summary, our brand investments are yielding positive returns that we anticipate will drive sustainable growth and enhance long term monetization. Despite some headwinds, we remain optimistic about the rest of the year and in our ability to achieve double digit top line growth in the medium term. We expect the strength in partnership with Hollisto to contribute to our growth through an improved user experience. We are looking forward to collaborating with the entrepreneurial holistic team and I would like to express my gratitude to our teams for their ongoing hard work and dedication. With this, I'll hand over to Robin. Speaker 200:06:41Thank you, Johannes, and good morning, everyone. Welcome to our Q2 earnings call. I've been back at trivago for 4 months now, and I'm really encouraged by our focus on our key strategic priorities. During this quarter, we've continued to see positive trends that move us closer to our midterm goal of achieving double digit year over year revenue growth. We believe that trivago, as one of the strongest travel brands in the world, is both an interesting and powerful marketing channel for our advertisers. Speaker 200:07:12A significant part of our marketing budget is invested in brand marketing, including TV advertising, which allows us to also reach offline consumers and bring them into the online world. Our strong brand marketing delivers incremental users to advertisers that they can acquire performance based on a global scale. We have seen the positive impact of our brand marketing campaign, not only in branded revenue growth, but also in increased booking conversions and improved lead quality. I will now review our Q2 results and provide an update on our outlook for the remainder of 2024. Unless otherwise stated, all comparisons for 2024 are on a year over year basis. Speaker 200:07:57During the Q2 of 2024, we achieved total revenues of €118,600,000 representing a 5% decline compared to the prior year Q2. However, the year over year decline was less pronounced than what we observed in the past four quarters. Referral revenues increased by 12% in the Americas, but decreased by 17% in the Developed Europe segment and by 2% in the Rest of World segment. We observed positive revenue growth from our branded traffic channels across all three segments and are pleased with the results of our brand marketing efforts. Although we are still early in our journey to scale brand marketing investments and our spending remains low compared to pre COVID levels, we see significant upside potential in the coming years. Speaker 200:08:48We are confident that we will return to double digit top line growth in the midterm. Despite positive branded revenue developments, we continue to observe negative revenue declines in our performance marketing channels across all three segments. Significant changes in Google advertisement formats, which began in the Q2 of 2023 increased exposure to less favorable formats for us. These changes led to increased volatility and traffic volume losses in our performance marketing channels. We expect this to continue and we maintain a disciplined opportunity driven investment strategy. Speaker 200:09:22We do not intend to compensate for volume losses at the expense of our long term brand investment. The 2nd quarter saw healthier bidding dynamics in our Americas segments, whereas Developed Europe and the Rest of World continue to lag behind the prior year, but show signs of improvements. In summary, our Americas segment experienced positive trended revenue growth, healthier monetization levels and offset by performance marketing losses, resulting in overall referral revenue growth. In Developed Europe and Rest of World, while branded revenue growth was positive, performance marketing losses and softer bidding dynamics compared to the same period in 2023 offset the growth, resulting in an overall decline. Regarding operational expenses, we incurred €11,500,000 higher operating expenses totaling €127,400,000 during the Q2 of 2024. Speaker 200:10:22This increase was primarily due to €12,000,000 higher selling and marketing expenses, partially offset by €700,000 lower general and administrative costs. Advertising spend increased by 31% in Americas and by 38% in Rest of World. In Developed Europe, advertising spend decreased by 10% due to a significant reduction in performance marketing spend. Brand marketing spend increased in all three segments. As anticipated, the increased brand investments during the quarter Overall, we had a net loss of 4,900,000 Overall, we had a net loss of €4,900,000 and an adjusted EBITDA loss of €5,400,000 during the Q2. Speaker 200:11:17I would like to now share some further details on our investment in Hollisto. We are happy about our initial investment in Hollisto, which closed on July 30, 2024. Hollisto is an AI driven tech company that serves as a hotel rate aggregator and white label booking engine. Hollisto was founded in 2015 and has several brands under its umbrella like Hollisto, I would say its Trevoluro. In 2023, Holisto generated around US37 $1,000,000 net revenues and have been growing double digit year over year top line over the last years. Speaker 200:11:54They were almost breakeven in terms of operating income in 2023. We have invested US10 $1,000,000 to acquire a 30% interest and have an option to acquire the remaining 70% interest in Allisto to fully acquire the company within the next 15 months. Maximum exercise price for the call option is set to $60,000,000 If we were to exercise the option, we may elect to settle the purchase price partially in cash and partially in Trivago shares, with shares not representing more than 50% of the purchase price. We believe that this strategic investment will help us to further improve our user experience and look forward to the entrepreneurial and data driven team. Looking ahead, we see a solid travel demand. Speaker 200:12:43We continue to provide our partners with high quality traffic and expect advertisers to appreciate this over time. We plan to maintain our profitability targets and will not offset performance marketing volume losses as we focus on our brand marketing campaigns for long term growth. We still expect revenues to grow year over year during the second half of twenty twenty four, and we continue to guide our adjusted EBITDA for the full year to be around breakeven levels. We are pleased with the results of our bank marketing campaigns and remain confident that these investments would further increase our branded revenue over time, driving long term growth and profitability. With that, let's open the line for questions. Speaker 200:13:25Operator, we are now ready to take the first Operator00:13:51Your first question comes from the line of Jeremy Liu with UBS. Jeremy, your line is now open. Speaker 300:13:57Hey, good morning, guys. I have two questions. So number 1, can you go into some of the product gaps that the Haliso investment will help fill? What drove the decision to invest in them now if you've been partners since 2022? And second question, it looks like ROAS has improved versus 1Q, while we'd expect a step down given the historical seasonality. Speaker 300:14:22What's driving this? Are you seeing better payback in the brand channel? Speaker 200:14:30Jeremy, thank you for your question. I will comment on Hollisto. The product gap is basically that we see user irritation with leaving our site and landing on dozens of different sites. So we have on a hotel comparing lots of options. And whenever the user leads, especially in a world that is mobile, it creates irritation with different landing pages. Speaker 200:14:58I need to get used to, I need to sign up to the site. And we want to create consistency in the user experience when users leave our site, in particular, when they are locked in. So or when you are using our app that you have a smooth experience, you're not bouncing back and forth to different landing pages. And that is something we used to have pre pandemic. We had the product Express Booking, which we had a team, a dedicated office in building that and maintaining that. Speaker 200:15:29During the pandemic, when we consolidated, this has reduced and focus and then was deprecated in 2022. Holisto picked up the product, rebuilt it on their own costs and basically have shown that they were very well capable building a booking funnel that were well converting. Over the last year, they have gained substantial share in the U. Of well converting booking funnel aggregate rates on a very competitive level with high rate accuracy, which is always a challenge. And that's why we think they are an exceptional tech provider in offering a funnel that we can offer to other advertising partners as well to help them lift conversion rates. Speaker 200:16:18And that is a result of a more consistent user experience. And we do a co branding. So you have these less known booking sites that like a price line might be known in the U. S, but it's not known in Europe. And then we would have a co branded booking funnel that gives Priceline more trust and would also be part of lifting conversion. Speaker 200:16:44We just think it's a good timing. We have seen they delivered on what we partnered on. And that's why we think it was a good timing to do that now. And to the second question, so ROAS is effect of our marketing mix. And we saw branded revenues growth in all three segments. Speaker 200:17:08We are happy about the development. And so this contributes to our overall ROAS development. Speaker 300:17:18Great. Thank you, guys. Operator00:17:24Your next question comes from the line of Naved Khan with B. Riley Securities. Naved, your line is now open. Speaker 400:17:31Yes, hi. Thanks. Two questions from me. 1, the in developed Europe, the revenue decline was steeper in the Q2 versus the Q1. And if I look at Americas, that growth turned positive. Speaker 400:17:49So what's causing this divergence between Europe from the Americas? And the second question I had is just on your guidance of positive growth in the back half. If I have to kind of think about Q3 versus Q4, do you expect to be positive in both of these or how should I think about that? And any trends you can share maybe for July will be very helpful. Thank you. Speaker 200:18:13Yes. Thanks for your questions. So regarding Developed Europe, we had more headwinds from Google in Europe. So this is the case when you look at the performance, Americas positive, developed Europe negative. We had headwinds from Google in all three segments, but it was worse in Developed Europe. Speaker 200:18:38So the performance marketing revenue decline was much stronger in Developed Europe than in Americas. So and when you consider that we have branded revenue growth in all three segments, you get a feeling about the impact of the Google development. To your second question, in terms of guidance, we expect to return to growth over the course of the second half of this year. We expect Q3 still to be challenging because we already invested into brand marketing campaigns last summer and still have happened from Google. So challenging comps for Q3 and we expect Q4 to be better. Speaker 400:19:22Great. Maybe just a clarification on the Google headwinds that you saw. Speaker 200:19:30Is that due to the Speaker 400:19:31D and A that could have kind of impacted that? And then the bidding dynamics, which you also mentioned, seem to be better in the Americas, what's driving that? Speaker 200:19:45So the of course, it's the Google format changes, they started in Q2 'twenty three and they have been increasing the GHA and PPA share over time. And when you look at the development, so Q4 was worse than Q3, Q1 was worse than Q2 and Q2 was even worse than Q1. So we have the worst effect we saw in Q2. So this is definitely a driver. And to your second question in terms of monetization, we see healthy monetization in the Americas. Speaker 200:20:26This is nice marketplace dynamics. Developed Europe and Rest of the World is softer compared to last year, but we see positive trends there. Speaker 400:20:39Thank you, Johannes. Operator00:20:45Your next question comes from the line of Tom White with D. A. Davidson. Tom, your line is now open. Speaker 500:20:51This is Wyatt on for Tom. Thanks for taking our questions. I had one on Google as well. Could you just talk about the impact expectations during the second half of twenty twenty four relative to 2Q? Do you expect it to continue getting worse like you've seen? Speaker 500:21:08And I think you mentioned you expect it to stop going into you expect the impact to stop going into 2025. You just give some more color on your expectations regarding that? Thank you. Speaker 200:21:22The Google changes started so this is Johannes. Thank you for the question, Tom. The Google changes started in Q2 last year, and they gradually have increased exposure of the Google changes. And they were peaking in Q1 this year. They've done a massive change on top of what they had done in the course of the last year already. Speaker 200:21:45So the comps will soften in the course of the second half of the year. And then after Q1, let's say, they start seizing in Q1. This is based on the known headwinds we have seen. Whether Google will do more changes or not, that's hard to say. We see them continue doing changes. Speaker 200:22:09The exposure has stabilized, so we are not seeing massive changes on top of what we have seen right now. They have done algorithmic changes about 2 weeks ago, where they increased the diversity of advertiser mix in their placements. So there are continued changes. We see overall the exposure stabilizing. That's our observation. Speaker 200:22:34And over the course of the year, the comps will get better and start seizing in Q1 next year. Speaker 500:22:43Understood. Thank you very much. Operator00:22:49Your next question comes from the line of Ron Josey with Citibank. Ron, your line is now open. Speaker 100:22:55Hi, this is Robert on Speaker 600:22:57for Ron. Thanks for taking the question. Great to see the rollout of second price auction across all markets. Can you guys maybe talk to the initial feedback from your partners and then perhaps expand on the expected impact on bidding activity in second half of this year and then heading into 2025? Speaker 200:23:19Yes. So this has been a process we started last year and it was an appreciated change from all and most advertising partners, big ones, small ones, because it simplifies our marketplace. It makes bidding more simple. They're bidding algorithms that work on 2nd price auction and other performance marketing channels. So the feedback in the process was positive, and there was a strong demand to roll out roll this out quickly. Speaker 200:23:50It's technically challenging from algorithmic. Doing this right was a big challenge, but has gone pretty well. And so the satisfaction on the advertiser side is high. And then we want to see positive impact on the search results, which we are happy with. And the marketplace over time should become more competitive because more players are easier to can easily more easily optimize in our marketplace, which should drive a healthy marketplace. Speaker 600:24:33Got it. That's helpful. Thank you. And then one quick follow-up. On the broader travel environment, how would you describe user trends so far in July? Speaker 600:24:42And to what extent are those trends translating to auction bidding demand? Speaker 200:24:50This is Robin. We believe that the demand remains solid for the second half of the year. We also expect ABVs to be solid. So this looks healthy. And maybe you're interested what we saw in Q2 in Americas, stable ABBs, stable ADRs, length of stay was stable, so healthy. Speaker 200:25:11Developed Europe, we had stable ABBs, but slightly decreased ADRs, but longer length of stay. And the Rest of World, we had stable length of stay, but slightly decreased ADRs, which led to slightly decreased ABBs. Speaker 600:25:27Got it. Thanks for that color. Operator00:25:32Your next question comes from the line of Doug Anmuth with JPMorgan. Doug, your line is now open. Speaker 700:25:40Hey, this is Dave Young for Doug. Thanks for taking the questions. First one on the monetization in the current developed Europe and rest of world, could you remind us if you're seeing improvement there and how we should think about monetization in those regions going forward? And then secondly, your comments about returning to growth in second half, is this something that could happen regardless of what Google does? Speaker 200:26:07Rest of the world was slightly negative. We expect it to be positive in the second half of the year. Developed Europe is challenging, because I mentioned this because of the headwinds that we have from Google, software monetization. We expect that it's getting better, but it will be challenging in the second half of the year. And on Google, maybe I can comment on Google. Speaker 200:26:39We don't see increasing headwinds, rather softening in the course of the year. We expect some volatility. I think overall, it's also important to understand they have become less relevant in our overall revenue mix. So the volatility will have also less impact on our business moving forward. So regardless of what Google is doing drastic change, it will impact us. Speaker 200:27:06We think the most drastic changes are behind us. And we are adapting to the formats. We are improving those formats as well. And we think that we are very confident that we are on a good track to return to growth in the second half of the year. Speaker 700:27:26Great. Thank Operator00:27:37Your next question comes from the line of James Lee with Mizuho. James, your line is now open. Speaker 100:27:43Great. Thanks for taking my questions. A couple of questions here. I'm sorry, I joined the call a little bit late, so I apologize if the question is repeated here. Can you maybe start to talk about the rationale for investments for Hovisto? Speaker 100:27:56What are some of the key use cases for the company? And can you talk about what you're hoping to achieve with this technology? And also secondly, increased geopolitical tension in Middle East, any impact on bookings that you're seeing in Develop Europe? Thank you. Speaker 200:28:16So let me comment on Hollisto. I think our rationale is user experience. If we improve conversion, that translates into higher quality of leads and that translates into a higher willingness to pay fairly for our leads. And if we are able to lift conversion for our advertising partners, they are able to compete more in our auction. And if you the more people we have the more advertisers we have competing in our auction, the more healthy it is. Speaker 200:28:48So on the one side, that is irrational and then this better conversion is the best proxy for user satisfaction. So if we drive higher satisfaction across our core users, that has a high implication for returning. So lifting retention is an aspect that also should drive growth moving forward. So it's a marketplace aspect to drive diversity, make more advertisers competitive in our auction and then a better conversion, a better user experience leading to more satisfaction and higher retention. Hi, James, this is Robin. Speaker 200:29:37Not sure if I fully got your second question. So did you ask if we see a negative impact of the developments in Middle East? Yes. Yes. Okay. Speaker 200:29:49So there are certainly impacts, but it's not significant from what we see, because the top markets are other markets in the Rest of World segment. And there was also something I think related to Developed Europe. So can you repeat it please? Speaker 100:30:09No, no, that was exactly the question, the increased geopolitical tension Middle East, how that impact Europe's booking. So you answered that question. Thank you so much. So Robin, if I can ask one more question here. You guys talking about shifting to brand spending in the past. Speaker 100:30:27And can you share about maybe the progress you have made so far? And anything that gives you confidence to continue moving forward this marketing strategy? Thanks. Speaker 200:30:39Sure. So we started the new campaigns in the end of last year, and then we have been increasing the investments. And with our investments we follow seasonality. So the summer season is important for us. This is where we see the highest demand. Speaker 200:30:55This is also where we invest most of our budget and this is also where we expect the highest revenues. The summer season is important. We are investing. We keep increasing the investments. As we said, we saw in Q2, we saw branded revenue growth in all three segments. Speaker 200:31:14This is I guess this is good news and we keep investing. We keep optimizing. Brand marketing is not easy. It's complex. So you have to there are several drivers. Speaker 200:31:26You have to measure it. You have to understand it. You have to improve it. So negotiations are important. The spots are important. Speaker 200:31:34And then it's a test and learn approach, but we are happy about the developments in Q2. We keep investing and we move forward step by step. And in terms of confidence, this is Johannes, maybe I can add. So we're comparing what and what channels we invested pre pandemic, and we are certainly testing the health of these channels. And we see substantial upside potential in investing more in certain channels and that gives us the confidence that there's growth opportunity in brand marketing activities. Speaker 200:32:11And we also see the positive effects of our brand marketing investments in terms of higher booking conversions, higher quality of leads to our advertisers. So this traffic really has high quality and this will we anticipate that this will have a positive impact also on our monetization over time. Speaker 100:32:33Great. Thanks so much. Operator00:32:39There are no further questions at this time. I will now turn the conference back over to Ioannis. Ioannis? Speaker 200:32:47Thank you all for joining our earnings call today. We appreciate your time and interest in our company. We look forward to updating you on our progress and results in the next call. Thank you. Operator00:32:59This concludes today's conference call. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallFirst Northwest Bancorp Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) First Northwest Bancorp Earnings Headlinestrivago N.V.'s (NASDAQ:TRVG) market cap rose US$24m last week; public companies who hold 59% profited and so did insidersApril 17, 2025 | finance.yahoo.comTrivago appoints Wolf Schmuhl as CFOApril 16, 2025 | markets.businessinsider.comFBI Warns: Wave Of Retiree Cyber Hacks Coming In 2025Try to think back to the fall of 2008… The pandemic accelerated America's descent into a “no-cash society” by several years…April 24, 2025 | Colonial Metals (Ad)Brokerages Set trivago (NASDAQ:TRVG) PT at $2.94April 16, 2025 | americanbankingnews.comtrivago: I Think It's Dead MoneyApril 15, 2025 | seekingalpha.comtrivago N.V.: trivago Appoints Dr. Wolf Schmuhl as Chief Financial OfficerApril 15, 2025 | finanznachrichten.deSee More trivago Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like First Northwest Bancorp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on First Northwest Bancorp and other key companies, straight to your email. Email Address About First Northwest BancorpFirst Northwest Bancorp (NASDAQ:FNWB) operates as a bank holding company for First Fed Bank that provides commercial and consumer banking services to individuals, businesses, and nonprofit organizations in western Washington, the United States. The company accepts various deposit instruments, including checking, money market deposit, savings, and transaction accounts, as well as certificates of deposit. It also originates one- to four-family mortgage loans, commercial and multi-family real estate loans, construction and land loans, and commercial business loans, as well as consumer loans primarily consisting of automobile loans, and home-equity loans and lines of credit. First Northwest Bancorp operates branch offices in Clallam, Jefferson, King, Kitsap, and Whatcom Counties, Washington. First Northwest Bancorp was founded in 1923 and is based in Port Angeles, Washington.View First Northwest Bancorp ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock?Genuine Parts: Solid Earnings But Economic Uncertainties RemainBreaking Down Taiwan Semiconductor's Earnings and Future Upside Upcoming Earnings AbbVie (4/25/2025)AON (4/25/2025)Colgate-Palmolive (4/25/2025)HCA Healthcare (4/25/2025)NatWest Group (4/25/2025)Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the trivago Q2 Earnings Call 2024. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. I must advise you the call is being recorded today, Wednesday, 31st July 2024. Speaker 100:00:27We are pleased Operator00:00:27to be joined on the call today by Ioannis Tomas, trivago's CEO and Managing Director and Robin Harris, trivago's CFO and Managing Director. The following discussion, including responses to your question, reflects management views as of today, Wednesday, July 31, 2024 only. Trivago does not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to the Q2 2024 operating and financial review and trivago's other filings with the SEC for information about factors which could cause trivago's actual results to differ materially from these forward looking statements. Operator00:01:09You will find reconciliations of non GAAP measures to the most comparable GAAP measure discussed in Trivago's rating and financial review, which is posted on trivago's Investor Relations website at ir. Trivago.com. You are encouraged to periodically visit trivago's Investor Relations website for important content. Finally, unless otherwise stated, all comparison on this call will be against the sole credit parable period of 2023. With that, let me turn the call over to Ioannis. Speaker 200:01:38Good morning, everyone. Thank you for joining our Q2 2024 earnings call. The Q2 of 2024 marks the 4th consecutive quarter with improved top line trajectory. We are pleased to see positive branded revenue growth in all three segments. Despite the challenges posed by Google's ad former changes, our branded revenue growth has largely offset the negative impact from performance marketing. Speaker 200:02:05These known headwinds will likely persist for the remainder of the year and should cease in early 2025. We remain confident that we can return to growth in the second half of the year. Now let's move on to our strategic priorities. Our first strategic priority is branded growth. We remain one of the most recognized travel brands in the and are pleased with the outcomes of our brand marketing campaigns in Q2. Speaker 200:02:34Our marketing teams continue to push boundaries. In the first half of twenty twenty four, our in house creative production team developed 6 new master sports for our TV campaign. These ads were tested live and the best performing creators were localized based on the impact in the market. Using AI, the team produced over 100 tailored TV spots, showcasing our unique capabilities to test assumptions and optimize campaigns across our segments. Our second strategic priority is to improve our hotel search experience. Speaker 200:03:07We aim to help travelers find their ideal hotel. We have expanded our AI powered hotel highlights to mobile and our app platforms. We have focused on improving quality and put particular focus on surfacing unique selling points of hotels through that feature. I'm also excited to share that since we arrived, we had the strongest quarter in terms of the number of experiments we run on our website. These incremental improvements have collectively led to tangible increase in conversion rate, which is our strongest proxy for user satisfaction and retention. Speaker 200:03:44This impact demonstrates the accelerated pace of execution and learning of our tech teams. Our 3rd strategic priority is to offer the best deal discovery experience. We strive to help travelers find great deals and better prices. We have improved the visibility and quality of deals in our search results. We experimented with new formats for highlighting deals and increased the coverage of member only rates from our advertising partners. Speaker 200:04:13These special rates offer additional savings and require users to sign up for trivago. Our 4th priority is to create value for our advertising partners. Compared to last year, we have seen improved booking conversion rates delivering more effective traffic to them. The improved marketplace dynamics across all segments suggest that our branded and higher converting traffic is valued by our advertisers. We are also excited to announce the completion of our global rollout of the 2nd price auction model in our marketplace. Speaker 200:04:48This complex project was delivered on time, thanks to the strong collaboration with our partners. I'm also pleased to share news about our investment in Hollisto. The company is an AI driven travel tech platform and serves as a hotel rate aggregator. In 2022, we partnered with them on Trivago Book and Go, a co branded booking funnel developed and hosted by Volisto. This initiative proved successful, increasing their conversion rates and growing their market share. Speaker 200:05:20In the U. S, they have become a top 5 advertiser on our Travagon Book and Go to all our advertising partners. Our goal is to provide a more consistent booking experience for our users and help our advertising partners to drive conversion. Volisto's footprint and rate optimization and price accuracy is best in class. The team is leveraging AI to optimize rate exposure and dynamic recent years. Speaker 200:06:02In summary, our brand investments are yielding positive returns that we anticipate will drive sustainable growth and enhance long term monetization. Despite some headwinds, we remain optimistic about the rest of the year and in our ability to achieve double digit top line growth in the medium term. We expect the strength in partnership with Hollisto to contribute to our growth through an improved user experience. We are looking forward to collaborating with the entrepreneurial holistic team and I would like to express my gratitude to our teams for their ongoing hard work and dedication. With this, I'll hand over to Robin. Speaker 200:06:41Thank you, Johannes, and good morning, everyone. Welcome to our Q2 earnings call. I've been back at trivago for 4 months now, and I'm really encouraged by our focus on our key strategic priorities. During this quarter, we've continued to see positive trends that move us closer to our midterm goal of achieving double digit year over year revenue growth. We believe that trivago, as one of the strongest travel brands in the world, is both an interesting and powerful marketing channel for our advertisers. Speaker 200:07:12A significant part of our marketing budget is invested in brand marketing, including TV advertising, which allows us to also reach offline consumers and bring them into the online world. Our strong brand marketing delivers incremental users to advertisers that they can acquire performance based on a global scale. We have seen the positive impact of our brand marketing campaign, not only in branded revenue growth, but also in increased booking conversions and improved lead quality. I will now review our Q2 results and provide an update on our outlook for the remainder of 2024. Unless otherwise stated, all comparisons for 2024 are on a year over year basis. Speaker 200:07:57During the Q2 of 2024, we achieved total revenues of €118,600,000 representing a 5% decline compared to the prior year Q2. However, the year over year decline was less pronounced than what we observed in the past four quarters. Referral revenues increased by 12% in the Americas, but decreased by 17% in the Developed Europe segment and by 2% in the Rest of World segment. We observed positive revenue growth from our branded traffic channels across all three segments and are pleased with the results of our brand marketing efforts. Although we are still early in our journey to scale brand marketing investments and our spending remains low compared to pre COVID levels, we see significant upside potential in the coming years. Speaker 200:08:48We are confident that we will return to double digit top line growth in the midterm. Despite positive branded revenue developments, we continue to observe negative revenue declines in our performance marketing channels across all three segments. Significant changes in Google advertisement formats, which began in the Q2 of 2023 increased exposure to less favorable formats for us. These changes led to increased volatility and traffic volume losses in our performance marketing channels. We expect this to continue and we maintain a disciplined opportunity driven investment strategy. Speaker 200:09:22We do not intend to compensate for volume losses at the expense of our long term brand investment. The 2nd quarter saw healthier bidding dynamics in our Americas segments, whereas Developed Europe and the Rest of World continue to lag behind the prior year, but show signs of improvements. In summary, our Americas segment experienced positive trended revenue growth, healthier monetization levels and offset by performance marketing losses, resulting in overall referral revenue growth. In Developed Europe and Rest of World, while branded revenue growth was positive, performance marketing losses and softer bidding dynamics compared to the same period in 2023 offset the growth, resulting in an overall decline. Regarding operational expenses, we incurred €11,500,000 higher operating expenses totaling €127,400,000 during the Q2 of 2024. Speaker 200:10:22This increase was primarily due to €12,000,000 higher selling and marketing expenses, partially offset by €700,000 lower general and administrative costs. Advertising spend increased by 31% in Americas and by 38% in Rest of World. In Developed Europe, advertising spend decreased by 10% due to a significant reduction in performance marketing spend. Brand marketing spend increased in all three segments. As anticipated, the increased brand investments during the quarter Overall, we had a net loss of 4,900,000 Overall, we had a net loss of €4,900,000 and an adjusted EBITDA loss of €5,400,000 during the Q2. Speaker 200:11:17I would like to now share some further details on our investment in Hollisto. We are happy about our initial investment in Hollisto, which closed on July 30, 2024. Hollisto is an AI driven tech company that serves as a hotel rate aggregator and white label booking engine. Hollisto was founded in 2015 and has several brands under its umbrella like Hollisto, I would say its Trevoluro. In 2023, Holisto generated around US37 $1,000,000 net revenues and have been growing double digit year over year top line over the last years. Speaker 200:11:54They were almost breakeven in terms of operating income in 2023. We have invested US10 $1,000,000 to acquire a 30% interest and have an option to acquire the remaining 70% interest in Allisto to fully acquire the company within the next 15 months. Maximum exercise price for the call option is set to $60,000,000 If we were to exercise the option, we may elect to settle the purchase price partially in cash and partially in Trivago shares, with shares not representing more than 50% of the purchase price. We believe that this strategic investment will help us to further improve our user experience and look forward to the entrepreneurial and data driven team. Looking ahead, we see a solid travel demand. Speaker 200:12:43We continue to provide our partners with high quality traffic and expect advertisers to appreciate this over time. We plan to maintain our profitability targets and will not offset performance marketing volume losses as we focus on our brand marketing campaigns for long term growth. We still expect revenues to grow year over year during the second half of twenty twenty four, and we continue to guide our adjusted EBITDA for the full year to be around breakeven levels. We are pleased with the results of our bank marketing campaigns and remain confident that these investments would further increase our branded revenue over time, driving long term growth and profitability. With that, let's open the line for questions. Speaker 200:13:25Operator, we are now ready to take the first Operator00:13:51Your first question comes from the line of Jeremy Liu with UBS. Jeremy, your line is now open. Speaker 300:13:57Hey, good morning, guys. I have two questions. So number 1, can you go into some of the product gaps that the Haliso investment will help fill? What drove the decision to invest in them now if you've been partners since 2022? And second question, it looks like ROAS has improved versus 1Q, while we'd expect a step down given the historical seasonality. Speaker 300:14:22What's driving this? Are you seeing better payback in the brand channel? Speaker 200:14:30Jeremy, thank you for your question. I will comment on Hollisto. The product gap is basically that we see user irritation with leaving our site and landing on dozens of different sites. So we have on a hotel comparing lots of options. And whenever the user leads, especially in a world that is mobile, it creates irritation with different landing pages. Speaker 200:14:58I need to get used to, I need to sign up to the site. And we want to create consistency in the user experience when users leave our site, in particular, when they are locked in. So or when you are using our app that you have a smooth experience, you're not bouncing back and forth to different landing pages. And that is something we used to have pre pandemic. We had the product Express Booking, which we had a team, a dedicated office in building that and maintaining that. Speaker 200:15:29During the pandemic, when we consolidated, this has reduced and focus and then was deprecated in 2022. Holisto picked up the product, rebuilt it on their own costs and basically have shown that they were very well capable building a booking funnel that were well converting. Over the last year, they have gained substantial share in the U. Of well converting booking funnel aggregate rates on a very competitive level with high rate accuracy, which is always a challenge. And that's why we think they are an exceptional tech provider in offering a funnel that we can offer to other advertising partners as well to help them lift conversion rates. Speaker 200:16:18And that is a result of a more consistent user experience. And we do a co branding. So you have these less known booking sites that like a price line might be known in the U. S, but it's not known in Europe. And then we would have a co branded booking funnel that gives Priceline more trust and would also be part of lifting conversion. Speaker 200:16:44We just think it's a good timing. We have seen they delivered on what we partnered on. And that's why we think it was a good timing to do that now. And to the second question, so ROAS is effect of our marketing mix. And we saw branded revenues growth in all three segments. Speaker 200:17:08We are happy about the development. And so this contributes to our overall ROAS development. Speaker 300:17:18Great. Thank you, guys. Operator00:17:24Your next question comes from the line of Naved Khan with B. Riley Securities. Naved, your line is now open. Speaker 400:17:31Yes, hi. Thanks. Two questions from me. 1, the in developed Europe, the revenue decline was steeper in the Q2 versus the Q1. And if I look at Americas, that growth turned positive. Speaker 400:17:49So what's causing this divergence between Europe from the Americas? And the second question I had is just on your guidance of positive growth in the back half. If I have to kind of think about Q3 versus Q4, do you expect to be positive in both of these or how should I think about that? And any trends you can share maybe for July will be very helpful. Thank you. Speaker 200:18:13Yes. Thanks for your questions. So regarding Developed Europe, we had more headwinds from Google in Europe. So this is the case when you look at the performance, Americas positive, developed Europe negative. We had headwinds from Google in all three segments, but it was worse in Developed Europe. Speaker 200:18:38So the performance marketing revenue decline was much stronger in Developed Europe than in Americas. So and when you consider that we have branded revenue growth in all three segments, you get a feeling about the impact of the Google development. To your second question, in terms of guidance, we expect to return to growth over the course of the second half of this year. We expect Q3 still to be challenging because we already invested into brand marketing campaigns last summer and still have happened from Google. So challenging comps for Q3 and we expect Q4 to be better. Speaker 400:19:22Great. Maybe just a clarification on the Google headwinds that you saw. Speaker 200:19:30Is that due to the Speaker 400:19:31D and A that could have kind of impacted that? And then the bidding dynamics, which you also mentioned, seem to be better in the Americas, what's driving that? Speaker 200:19:45So the of course, it's the Google format changes, they started in Q2 'twenty three and they have been increasing the GHA and PPA share over time. And when you look at the development, so Q4 was worse than Q3, Q1 was worse than Q2 and Q2 was even worse than Q1. So we have the worst effect we saw in Q2. So this is definitely a driver. And to your second question in terms of monetization, we see healthy monetization in the Americas. Speaker 200:20:26This is nice marketplace dynamics. Developed Europe and Rest of the World is softer compared to last year, but we see positive trends there. Speaker 400:20:39Thank you, Johannes. Operator00:20:45Your next question comes from the line of Tom White with D. A. Davidson. Tom, your line is now open. Speaker 500:20:51This is Wyatt on for Tom. Thanks for taking our questions. I had one on Google as well. Could you just talk about the impact expectations during the second half of twenty twenty four relative to 2Q? Do you expect it to continue getting worse like you've seen? Speaker 500:21:08And I think you mentioned you expect it to stop going into you expect the impact to stop going into 2025. You just give some more color on your expectations regarding that? Thank you. Speaker 200:21:22The Google changes started so this is Johannes. Thank you for the question, Tom. The Google changes started in Q2 last year, and they gradually have increased exposure of the Google changes. And they were peaking in Q1 this year. They've done a massive change on top of what they had done in the course of the last year already. Speaker 200:21:45So the comps will soften in the course of the second half of the year. And then after Q1, let's say, they start seizing in Q1. This is based on the known headwinds we have seen. Whether Google will do more changes or not, that's hard to say. We see them continue doing changes. Speaker 200:22:09The exposure has stabilized, so we are not seeing massive changes on top of what we have seen right now. They have done algorithmic changes about 2 weeks ago, where they increased the diversity of advertiser mix in their placements. So there are continued changes. We see overall the exposure stabilizing. That's our observation. Speaker 200:22:34And over the course of the year, the comps will get better and start seizing in Q1 next year. Speaker 500:22:43Understood. Thank you very much. Operator00:22:49Your next question comes from the line of Ron Josey with Citibank. Ron, your line is now open. Speaker 100:22:55Hi, this is Robert on Speaker 600:22:57for Ron. Thanks for taking the question. Great to see the rollout of second price auction across all markets. Can you guys maybe talk to the initial feedback from your partners and then perhaps expand on the expected impact on bidding activity in second half of this year and then heading into 2025? Speaker 200:23:19Yes. So this has been a process we started last year and it was an appreciated change from all and most advertising partners, big ones, small ones, because it simplifies our marketplace. It makes bidding more simple. They're bidding algorithms that work on 2nd price auction and other performance marketing channels. So the feedback in the process was positive, and there was a strong demand to roll out roll this out quickly. Speaker 200:23:50It's technically challenging from algorithmic. Doing this right was a big challenge, but has gone pretty well. And so the satisfaction on the advertiser side is high. And then we want to see positive impact on the search results, which we are happy with. And the marketplace over time should become more competitive because more players are easier to can easily more easily optimize in our marketplace, which should drive a healthy marketplace. Speaker 600:24:33Got it. That's helpful. Thank you. And then one quick follow-up. On the broader travel environment, how would you describe user trends so far in July? Speaker 600:24:42And to what extent are those trends translating to auction bidding demand? Speaker 200:24:50This is Robin. We believe that the demand remains solid for the second half of the year. We also expect ABVs to be solid. So this looks healthy. And maybe you're interested what we saw in Q2 in Americas, stable ABBs, stable ADRs, length of stay was stable, so healthy. Speaker 200:25:11Developed Europe, we had stable ABBs, but slightly decreased ADRs, but longer length of stay. And the Rest of World, we had stable length of stay, but slightly decreased ADRs, which led to slightly decreased ABBs. Speaker 600:25:27Got it. Thanks for that color. Operator00:25:32Your next question comes from the line of Doug Anmuth with JPMorgan. Doug, your line is now open. Speaker 700:25:40Hey, this is Dave Young for Doug. Thanks for taking the questions. First one on the monetization in the current developed Europe and rest of world, could you remind us if you're seeing improvement there and how we should think about monetization in those regions going forward? And then secondly, your comments about returning to growth in second half, is this something that could happen regardless of what Google does? Speaker 200:26:07Rest of the world was slightly negative. We expect it to be positive in the second half of the year. Developed Europe is challenging, because I mentioned this because of the headwinds that we have from Google, software monetization. We expect that it's getting better, but it will be challenging in the second half of the year. And on Google, maybe I can comment on Google. Speaker 200:26:39We don't see increasing headwinds, rather softening in the course of the year. We expect some volatility. I think overall, it's also important to understand they have become less relevant in our overall revenue mix. So the volatility will have also less impact on our business moving forward. So regardless of what Google is doing drastic change, it will impact us. Speaker 200:27:06We think the most drastic changes are behind us. And we are adapting to the formats. We are improving those formats as well. And we think that we are very confident that we are on a good track to return to growth in the second half of the year. Speaker 700:27:26Great. Thank Operator00:27:37Your next question comes from the line of James Lee with Mizuho. James, your line is now open. Speaker 100:27:43Great. Thanks for taking my questions. A couple of questions here. I'm sorry, I joined the call a little bit late, so I apologize if the question is repeated here. Can you maybe start to talk about the rationale for investments for Hovisto? Speaker 100:27:56What are some of the key use cases for the company? And can you talk about what you're hoping to achieve with this technology? And also secondly, increased geopolitical tension in Middle East, any impact on bookings that you're seeing in Develop Europe? Thank you. Speaker 200:28:16So let me comment on Hollisto. I think our rationale is user experience. If we improve conversion, that translates into higher quality of leads and that translates into a higher willingness to pay fairly for our leads. And if we are able to lift conversion for our advertising partners, they are able to compete more in our auction. And if you the more people we have the more advertisers we have competing in our auction, the more healthy it is. Speaker 200:28:48So on the one side, that is irrational and then this better conversion is the best proxy for user satisfaction. So if we drive higher satisfaction across our core users, that has a high implication for returning. So lifting retention is an aspect that also should drive growth moving forward. So it's a marketplace aspect to drive diversity, make more advertisers competitive in our auction and then a better conversion, a better user experience leading to more satisfaction and higher retention. Hi, James, this is Robin. Speaker 200:29:37Not sure if I fully got your second question. So did you ask if we see a negative impact of the developments in Middle East? Yes. Yes. Okay. Speaker 200:29:49So there are certainly impacts, but it's not significant from what we see, because the top markets are other markets in the Rest of World segment. And there was also something I think related to Developed Europe. So can you repeat it please? Speaker 100:30:09No, no, that was exactly the question, the increased geopolitical tension Middle East, how that impact Europe's booking. So you answered that question. Thank you so much. So Robin, if I can ask one more question here. You guys talking about shifting to brand spending in the past. Speaker 100:30:27And can you share about maybe the progress you have made so far? And anything that gives you confidence to continue moving forward this marketing strategy? Thanks. Speaker 200:30:39Sure. So we started the new campaigns in the end of last year, and then we have been increasing the investments. And with our investments we follow seasonality. So the summer season is important for us. This is where we see the highest demand. Speaker 200:30:55This is also where we invest most of our budget and this is also where we expect the highest revenues. The summer season is important. We are investing. We keep increasing the investments. As we said, we saw in Q2, we saw branded revenue growth in all three segments. Speaker 200:31:14This is I guess this is good news and we keep investing. We keep optimizing. Brand marketing is not easy. It's complex. So you have to there are several drivers. Speaker 200:31:26You have to measure it. You have to understand it. You have to improve it. So negotiations are important. The spots are important. Speaker 200:31:34And then it's a test and learn approach, but we are happy about the developments in Q2. We keep investing and we move forward step by step. And in terms of confidence, this is Johannes, maybe I can add. So we're comparing what and what channels we invested pre pandemic, and we are certainly testing the health of these channels. And we see substantial upside potential in investing more in certain channels and that gives us the confidence that there's growth opportunity in brand marketing activities. Speaker 200:32:11And we also see the positive effects of our brand marketing investments in terms of higher booking conversions, higher quality of leads to our advertisers. So this traffic really has high quality and this will we anticipate that this will have a positive impact also on our monetization over time. Speaker 100:32:33Great. Thanks so much. Operator00:32:39There are no further questions at this time. I will now turn the conference back over to Ioannis. Ioannis? Speaker 200:32:47Thank you all for joining our earnings call today. We appreciate your time and interest in our company. We look forward to updating you on our progress and results in the next call. Thank you. Operator00:32:59This concludes today's conference call. You may now disconnect.Read morePowered by