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TripAdvisor (TRIP) Q1 Earnings & Revenues Miss Estimates
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TripAdvisor Inc. (TRIP - Free Report) reported adjusted first-quarter 2017 earnings of 16 cents per share, missing the Zacks Consensus Estimate of by a penny. Adjusted earnings exclude one-time items but include stock-based compensation expense.
In 2016, the instant booking rollout had led to significant revenue headwinds, muting revenue growth, thereby impacting profitability. Lately, the company has been making efforts to get travelers to book hotels directly on its website instead of just using it as a review site. These efforts led to an increase in the company’s clicked-based advertising and transaction revenues, expanding its top-line growth in the quarter.
The investors applauded the company’s efforts and the share price surged more than 6% in the after-hours trading despite weak first-quarter earnings.
However, in the last one year, shares of TripAdvisor underperformed the Zacks categorized Electronic Commerce industry. While the industry gained 40.6%, the stock lost 23.1%.
Revenues
TripAdvisor reported revenues of $372 million in the first quarter, reflecting an increase of 17.7% sequentially and 5.7% year over year. The increase was driven by strength in clicked-based advertising and transaction revenues.
However, revenues missed the Zacks Consensus Estimate of $379 million.
Revenue Segments
TripAdvisor reports its revenue under two segments: Hotel and Other.
Revenues of $314 million from the Hotel segment increased 25% sequentially and 4% from the year-ago quarter but made up 84% of total revenue. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise, including that from the company’s largest subsidiary, SmarterTravel, as well as from operations in China.
Revenues of $58 million from the Other segment decreased 9% sequentially and 18% year over year and contributed the remaining 16% of the total revenue. This segment includes revenues from attractions, restaurants and vacation rentals businesses.
Revenues by Source
Revenues of $211 million from click-based advertising increased 12% from the year-ago quarter and accounted for 57% of the total revenue. Revenues from display-based advertising decreased 4% year over year to $65.0 million and brought home 17% of total revenue. The other hotel revenue component was $38 million, reflecting a decrease of 17% year over year and accounted for 10% of total revenue. Non-Hotel revenue component contributed the remaining 16%, accounting for $58 million in revenues, up 18% year over year.
Operating Results
TripAdvisor’s adjusted operating expenses of $328 million increased 13.1% sequentially and 11.6% year over year. The adjusted operating margin of 9.4% was up 371 bps sequentially but down 480 bps from the year ago-quarter.
On a GAAP basis, TripAdvisor’s net profit was $13 million or 9 cents per share, declining from the year-ago figure of $29 million or 20 cents.
Pro forma earnings declined to 16 cents per share from 22 cents in first-quarter 2016.
Balance Sheet & Cash Flow
TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $746 million, slightly up from $730 million in the prior quarter. Accounts receivables were $232 million, up from $189 million in the last quarter.
Long-term debt was $210 million in the first quarter compared with $91 million in the previous quarter.
Cash flow from operations was $134 million, significantly up from $46 million in the previous quarter. Capex was $18 million, up from $16 million in the fourth quarter. Free cash flow was $116 million, significantly up from $30 million in the previous quarter.
During the quarter, the company repurchased 3,529,923 shares for approximately $150 million.
TripAdvisor, Inc. Price, Consensus and EPS Surprise
TripAdvisor is an online travel research company that features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages and travel guides, to name a few. The company reported a weak first quarter with both the top line and the bottom line missing our estimates.
The company’s growth initiatives to boost hotel bookings from its own website have helped the company to expand its top-line growth. Moreover, strong focus on developing its mobile products, expansion into the international restaurant reservation space and improvement in user growth and engagement, especially related to mobile devices, are positives.
Additionally, TripAdvisor’s acquisitions complement its travel product portfolio. These also improve efficiency and expand user base, on the one hand, while increasing traffic, hotel shoppers and profits, on the other. The company is well positioned to grow, given its expanding user base, improving margins and increasing monetization of social and mobile platforms in the long term.
However, mounting expenses due to new initiatives and investments are hurting the company’s profits. Also, lack of visibility and intensifying competition from Priceline , Expedia (EXPE - Free Report) and Alphabet (GOOGL - Free Report) remain the future growth concerns.
Currently, TripAdvisor has a Zacks Rank #4 (Sell).
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TripAdvisor (TRIP) Q1 Earnings & Revenues Miss Estimates
TripAdvisor Inc. (TRIP - Free Report) reported adjusted first-quarter 2017 earnings of 16 cents per share, missing the Zacks Consensus Estimate of by a penny. Adjusted earnings exclude one-time items but include stock-based compensation expense.
In 2016, the instant booking rollout had led to significant revenue headwinds, muting revenue growth, thereby impacting profitability. Lately, the company has been making efforts to get travelers to book hotels directly on its website instead of just using it as a review site. These efforts led to an increase in the company’s clicked-based advertising and transaction revenues, expanding its top-line growth in the quarter.
The investors applauded the company’s efforts and the share price surged more than 6% in the after-hours trading despite weak first-quarter earnings.
However, in the last one year, shares of TripAdvisor underperformed the Zacks categorized Electronic Commerce industry. While the industry gained 40.6%, the stock lost 23.1%.
Revenues
TripAdvisor reported revenues of $372 million in the first quarter, reflecting an increase of 17.7% sequentially and 5.7% year over year. The increase was driven by strength in clicked-based advertising and transaction revenues.
However, revenues missed the Zacks Consensus Estimate of $379 million.
Revenue Segments
TripAdvisor reports its revenue under two segments: Hotel and Other.
Revenues of $314 million from the Hotel segment increased 25% sequentially and 4% from the year-ago quarter but made up 84% of total revenue. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise, including that from the company’s largest subsidiary, SmarterTravel, as well as from operations in China.
Revenues of $58 million from the Other segment decreased 9% sequentially and 18% year over year and contributed the remaining 16% of the total revenue. This segment includes revenues from attractions, restaurants and vacation rentals businesses.
Revenues by Source
Revenues of $211 million from click-based advertising increased 12% from the year-ago quarter and accounted for 57% of the total revenue. Revenues from display-based advertising decreased 4% year over year to $65.0 million and brought home 17% of total revenue. The other hotel revenue component was $38 million, reflecting a decrease of 17% year over year and accounted for 10% of total revenue. Non-Hotel revenue component contributed the remaining 16%, accounting for $58 million in revenues, up 18% year over year.
Operating Results
TripAdvisor’s adjusted operating expenses of $328 million increased 13.1% sequentially and 11.6% year over year. The adjusted operating margin of 9.4% was up 371 bps sequentially but down 480 bps from the year ago-quarter.
On a GAAP basis, TripAdvisor’s net profit was $13 million or 9 cents per share, declining from the year-ago figure of $29 million or 20 cents.
Pro forma earnings declined to 16 cents per share from 22 cents in first-quarter 2016.
Balance Sheet & Cash Flow
TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $746 million, slightly up from $730 million in the prior quarter. Accounts receivables were $232 million, up from $189 million in the last quarter.
Long-term debt was $210 million in the first quarter compared with $91 million in the previous quarter.
Cash flow from operations was $134 million, significantly up from $46 million in the previous quarter. Capex was $18 million, up from $16 million in the fourth quarter. Free cash flow was $116 million, significantly up from $30 million in the previous quarter.
During the quarter, the company repurchased 3,529,923 shares for approximately $150 million.
TripAdvisor, Inc. Price, Consensus and EPS Surprise
TripAdvisor, Inc. Price, Consensus and EPS Surprise | TripAdvisor, Inc. Quote
Our Take
TripAdvisor is an online travel research company that features reviews and advice on hotels, resorts, flights, vacation rentals, vacation packages and travel guides, to name a few. The company reported a weak first quarter with both the top line and the bottom line missing our estimates.
The company’s growth initiatives to boost hotel bookings from its own website have helped the company to expand its top-line growth. Moreover, strong focus on developing its mobile products, expansion into the international restaurant reservation space and improvement in user growth and engagement, especially related to mobile devices, are positives.
Additionally, TripAdvisor’s acquisitions complement its travel product portfolio. These also improve efficiency and expand user base, on the one hand, while increasing traffic, hotel shoppers and profits, on the other. The company is well positioned to grow, given its expanding user base, improving margins and increasing monetization of social and mobile platforms in the long term.
However, mounting expenses due to new initiatives and investments are hurting the company’s profits. Also, lack of visibility and intensifying competition from Priceline , Expedia (EXPE - Free Report) and Alphabet (GOOGL - Free Report) remain the future growth concerns.
Currently, TripAdvisor has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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