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TripAdvisor (TRIP) Q3 Earnings Miss Mark, Revenues Rise Y/Y

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TripAdvisor (TRIP - Free Report) reported adjusted third-quarter 2022 earnings of 28 cents per share, missing the Zacks Consensus Estimate by 28.2%. The bottom line declined 24.3% sequentially. Nevertheless, it increased 75% from the year-ago quarter’s figure.

Revenues of $459 million surged 51% year over year and 10%, sequentially. The same also surpassed the consensus mark by 3.1%.

Top-line growth was driven by increased consumer demand for travel industry-related services.

For the third quarter, average monthly unique users on Tripadvisor-branded sites increased 8% from the year-ago quarter’s level.

Strong performance across experiences offerings, recovery across the Tripadvisor Core, Viator and TheFork segments, and increased bookings to European destinations remained tailwinds.

However, adverse foreign currency fluctuations and macroeconomic headwinds affected the quarterly performance.

TripAdvisor, Inc. Price, Consensus and EPS Surprise

TripAdvisor, Inc. Price, Consensus and EPS Surprise

TripAdvisor, Inc. price-consensus-eps-surprise-chart | TripAdvisor, Inc. Quote

Quarterly Details

TripAdvisor reports revenues under three segments: Tripadvisor Core, Viator and TheFork.

Tripadvisor Core: Revenues summed $284 million (accounting for 62% of revenues), up 34% year over year. Revenues from Tripadvisor-branded hotels, including hotel auction and B2B subscription offerings, increased 31% from the prior-year quarter’s level to $188 million. Tripadvisor-branded display and platform revenues jumped 14% year over year to $33 million. Revenues from Tripadvisor experiences and dining (includes intersegment eliminations of $34 million) were $45 million, skyrocketing 96% year over year. Other revenues consisting of rentals, flights, cars and cruise revenues were up 6% from the prior-year quarter’s level to $18 million.

Viator: Revenues totaled $174 million (38% of the top line). The figure skyrocketed 138% from the year-ago quarter’s level, driven by seasonality, pent-up travel demand and an expansion of the experiences travel category.

TheFork: Revenues came in at $35 million (8% of revenues), increasing 17% year over year. The uptick was attributed to solid demand for TheFork’s products in key European markets.

Operating Results

TripAdvisor’s selling and marketing costs increased 58% year over year to $234 million. This downside is induced by higher spending on search engine marketing and other online traffic acquisitions across all segments and businesses to meet rising consumer travel demand amid the travel-sector recovery period.

General and administrative costs were up 22% from the year-ago quarter’s level to $45 million, caused by additional headcount and higher digital services taxes in Europe.

Technology and content costs of $55 million increased 6% on a year-over-year basis.

TRIP reported an operating income of $70 million for the third quarter compared with $16 million in the same quarter last year.

In the reported quarter, total adjusted EBITDA margin was 25% compared with 24% in the third quarter of 2021.

Balance Sheet & Cash Flow

As of Sep 30, 2022, cash and cash equivalents were $1.07 billion, up from $1.05 billion reported on Jun 30, 2022.

Long-term debt as of Sep 30, 2022, was $836 million. TRIP’s long-term debt was $835 million as of Jun 30, 2022.

Cash provided by operating activities was $60 million for the reported quarter compared with $295 million in the prior quarter.

Additionally, free cash flow was $46 million in the third quarter.

Zacks Rank & Stocks to Consider

TripAdvisor currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail-wholesale sector are Ross Stores (ROST - Free Report) , Arhaus (ARHS - Free Report) and The Kroger (KR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ross Stores has lost 18.5% on a year-to-date basis. The long-term earnings growth rate for the ROST stock is currently projected at 10.5%.

Arhaus has lost 29.3% on a year-to-date basis. The long-term earnings growth rate for the ARHS stock is currently projected at 14.3%.

Kroger has gained 3.5% on a year-to-date basis. The long-term earnings growth rate for the KR stock is currently projected at 11.7%.

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