Title

Presentation

Tripadvisor, Inc. beats earnings expectations. Reported EPS is $0.12, expectations were $0.02.

Operator: Good day and thank you for standing by. Welcome to the Tripadvisor First Quarter 2024 Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker for today, Angela White, VP of IR. Angela, please go ahead.

Angela White: Thank you, Felicia. Good morning, everyone, and welcome to Tripadvisor’s first quarter 2024 financial results call. Joining me today are Matt Goldberg, President and CEO; and Mike Noonan, CFO. This morning before the market opened, we filed and made available our earnings release. In that release, you’ll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call. Before we begin, I’d like to remind you that this call may contain estimates and other forward-looking statements that represent management’s view as of today, May 08, 2024. Tripadvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I’ll turn the call over to Matt.

Matt Goldberg: Thanks Angela, and good morning to everyone joining us today. We were pleased with our first quarter results, which represented a solid start to the year across the board. Revenue was $395 million, reflecting year-over-year growth of 6%, and adjusted EBITDA was $47 million, or 12% of revenue. Our results are a testament to our aligned strategy and the disciplined financial and operational execution of our teams. Later in the call, Mike will provide more financial details, but first I’ll cover the progress we’ve made operationally. As a reminder, we’re operating unique of complementary strategies across our segments. At Brand Tripadvisor, we’re focusing on engagement and delivering world class guidance products to diversify and fuel our monetization paths.

At Viator, we’re reinforcing our leadership position and experiences by investing in our brand, enhanced products and repeat bookings to drive LTV and improving unit economics. At TheFork, we’re driving revenue growth with margin improvement by delivering value to both diners and restaurants as the leader in the European dining market. Starting with Brand Tripadvisor, we delivered revenue of $240 million, a decline of 2%, and adjusted EBITDA of $78 million, or 33% of revenue. Our results reflect the mix of growth and profit profiles within our segment portfolio, as well as the initiatives we’re prioritizing to return to sustainable growth. The foundation we built so far and the work we’re pursuing in 2024 are expected to deliver clear strategic outcomes, drive continued scale in our global audience, generate additional members, who are more loyal and come back to us more frequently through direct channels like the app, and deliver sustainable growth across our diverse monetization paths.

These are the core elements to drive engagement led opportunities across all our categories and key to reducing our overall dependence on flyby traffic and addressing the well understood pressure on our legacy meta business. We’re measuring these outcomes across key metrics, including our overall audience, active members and app users, and average revenue per user. For all of these, our year-over-year trends improved between Q4 2023 and Q1 of 2024, and we’ve seen positive trends emerged in monthly sequential changes over the last six months. While we still have work to do continuing to transform this business, we’re well positioned to accelerate our progress and exit 2024 with more momentum than we’ve had at any point in the past few years.

As I mentioned on the last call, our three top priorities for Brand Tripadvisor this year are: one, differentiating the mobile app; two, shifting our marketing to reinforce our engagement led strategy; and three, leveraging the investments we’ve made in data and AI to deliver a more personalized experience for our users. Let me share a few of our accomplishments from Q1 across these three priorities and the proof points we continue to see that underscore how we can create more engagement and convert it into increased monetization. First, we scaled our Trips itinerary tool from web to app, where we incorporated learnings from the web only launch last year. We continue to test and roll out new features, including the ability to book experiences through our Trips tool and other commerce testing as part of trip planning.

One critical area we’ve been exploring is how to best layer in bookable experiences at every stage in the trip planning journey. For example, in our AI powered trip planning flow, when we ask users to select overall interests for their trip, like hidden gems or historical landmarks, we now dynamically add destination specific themes tied to the most relevant bookable experiences. So if you’re using our AI feature to build an itinerary for Rome, you might see Vatican skip-the-line tours, or pasta making classes listed alongside the more general interests that apply across destinations. We’re seeing that users who select one of these commerce focused interests generate 50% higher average revenue than users who don’t, which provides a fantastic signal of our ability to generate incremental demand and monetize it as users move through the journey.

Second, to reinforce our engagement strategy and lean into one of our core differentiators, we’ve been evaluating how free membership impacts a traveler’s content contributions. In Q1, we began testing a new recognition program for members called achievements, which is based on our research that tells us that users are motivated to contribute reviews, photos, trips and other guidance specifically to help other travelers. Achievements recognizes travelers for their contributions to the community with badges that showcase the things they’re passionate about, along with a new dashboard to track their progress. Although it’s early in testing, it has already delivered an increase of nearly 3x in content contributions per user. Importantly, this follows the strong growth we delivered last year including approximately 20% growth across UGC contributors, review submissions and photos.

We believe we can continue to build on this momentum as we further expand achievements and enhance our membership with additional incentives to reward engagement. Finally, on our last call, I talked about the introduction of GenAI-driven hotel review summaries and the early, but strong, positive indicators we’ve observed. We’ve continued to improve and expand this feature, measuring performance by the year-over-year change in revenue and engagement for hotels that have this feature versus those that don’t. For hotels with AI-driven summaries, the year-over-year change in click-based revenue is three percentage points better than those without. The underlying engagement is also healthier. Review submissions are three percentage points better, photo submissions are four percentage points better and saves are eight percentage points better.

We continue to expand the number of hotels with this feature, prioritizing recency and quality over quantity. We are also excited about our plans to scale this feature to our experiences and restaurant categories over time. I want to thank our teams for their relentless effort to transform Brand Tripadvisor. We are aligned on our strategy and focused on execution. We have a robust road map for 2024 and we have confidence we’ll continue to provide travelers with indispensable products, increase customer lifetime value and create even more opportunities for our partners. Turning now to Viator, as we noted on the last call, this year, we’re focused on continuing to scale while balancing growth, profitability and market share. Investments to date have driven scale in our customer base and value to our supplier base, reinforcing our leading position in experiences.

Viator has the advantage of the demand from hundreds of millions of visitors to the Tripadvisor site each month, including more than hundred million Tripadvisor users actively shopping for an experience. We continue to test and learn how best to capitalize on this relationship, given the cross team talent, deep industry knowledge and opportunities we have in our geographic and supply reach. In Q1, Viator revenue grew 23% year-over-year, while gross booking value or GBV grew approximately 15%. In addition to the top line results, we were very pleased with the year-over-year improvement in adjusted EBITDA margin, a function of our operating leverage in sales and marketing and our commitment to operational efficiency. Mike will hit more on the details shortly, but this quarter was an example of the levers we manage in order to strike the right balance between growth and profitability, both near and long term.

On the traveler side, we continue to work on building an experience that encourages repeat engagement and drives loyalty and lifetime value. This includes ongoing focus on every part of the journey. On acquisition, we are very pleased with our growth in brand health with meaningful increases in aided and unaided awareness, as well as consideration. As we grow our customer base, we are making it easier for them to book more things, more often. We are matching travelers to products, expanding our rewards program and making significant improvements to checkout pages. These changes are designed to provide more confidence in booking for our users, and they are driving incremental lift in conversion and in revenue per visitor. Further, as we grow our audience and improve the experience, we are increasingly serving our customers through our most efficient channel, the app.

In Q1, we saw record high app downloads, year-over-year growth in conversion and a record high for app bookings, our most loyal and highest repeat service. On the supply side, the value we are driving is clear as we continue to see low supplier churn and growth in supplier GBV retention in each subsequent year on our platform. Viator has generated nearly $4 billion in sales for its tour operators over the last year, and we are proud to be helping our operator partners access global demand to grow their businesses. We also see the value we are driving for our tour operators reflected in our take rate, which reached an all-time high in March driven by incremental benefit coming from our Accelerate program enhancements. With the largest supply base and set of products in the market, both of which continue to grow, we will remain focused on enhancing the value we add for our partners and expanding high-quality supply offerings.

Finally, at TheFork, in 2024, we’re prioritizing our efforts to drive value to our diners and restaurant owners as we transition to annual profitable growth. As the clear leader in European dining reservations, our hybrid model, revenue based on seated diners as well as ERB revenue, positions us to capture even more opportunities. Our Q1 results underscore that our past investment in technology and product with complete solutions to restaurants is paying off. Revenue at TheFork grew 17%, driven by a combination of bookings and pricing growth with meaningful margin improvement year-over-year. We also saw an opportunity during the quarter to balance the mix between brand and incentive marketing and performance marketing, given favorable returns in performance marketing channels.

We were pleased with the growth we delivered and plan to continue to refine our marketing mix. On the B2B side, in Q1, growth in our net restaurant count was over 4%, excluding Australia, where we have exited the market, driven by healthy growth across markets with promising growth in new restaurant signatures. We believe that our updated sales approach and technology solutions are gaining more traction, thanks to the changes in our go-to-market strategy, including a more segmented approach and proactive outreach triggered by restaurant profile data. The investments we have made in technology and product are enabling more opportunities such as ERB-driven pricing solutions, promotions and yield management, which we believe can drive higher restaurant ARPU.

Revenue we derive from ERP solutions is still a small portion of the total revenue of TheFork. However, given our leading position in the marketplace, we’re confident that the right balance between a strategic sales approach, onboarding and management for these small businesses and their owners will help us capture more B2B share ahead. Before I pass the call to Mike, I want to reiterate the conviction we have about the long-term opportunity in travel and the role we can play there. One thing we’ve learned over the past few years is that travel and experiences remain a high priority to consumers around the world. To-date, we haven’t identified notable changes in our behavioral data to suggest otherwise. Length of stay and share of hotels across star ratings have remained consistent despite ongoing inflationary pressures and geopolitical tensions.

Our traveler surveys indicate that consumers still have a tremendous appetite for travel. 80% of travelers expect to travel this summer, an increase from 76% last summer and international travel interest remains high. We head into the high travel season, pleased with the work we’ve done to strengthen our positioning in this dynamic industry. With that, I’ll turn the call over to Mike.

Mike Noonan: Thanks, Matt, and good morning, everyone. I will start with a recap of the quarter, and then we’ll provide some thoughts on near-term outlook and priorities for the remainder of the year. All growth rates are relative to the comparable periods in 2023 unless noted otherwise. We started the year with a solid quarter with revenue of $395 million, reflecting growth of 6%, adjusted EBITDA was $47 million or 12% of revenue and 300 basis points higher than last year. While we saw a slow start to the year in January, trends improved as we progressed through February and March. Turning to segment performance for the first quarter. Brand Tripadvisor delivered revenue of $240 million, which is a decline of 2%. Branded hotel revenue was $159 million, a decline of 5%, driven by similar declines in both Hotel Meta and our B2B revenue.

Hotel Meta performance was driven by sustained pricing strength across most of our geos in both free and paid channels, which was more than offset by lower click volumes. Our ROAS was slightly up year-over-year, which led to a marginally higher Hotel Meta contribution margin compared to last year. From a revenue perspective, Hotel Meta in the U.S. declined slightly, Rest of World declined modestly with APAC up slightly and EMEA declined in line with prior quarters. In B2B, revenue growth was impacted by decisions to deemphasize less incremental advertising products as well as flat performance in our subscription product as we began the transition to a self-service model that will serve our customers more effectively and efficiently going forward.

Media and advertising revenue grew 10% to $33 million. Better-than-expected growth was a result of higher contribution from our off-platform or creative media spend and by better-than-expected programmatic spend. We also saw some timing benefit from some campaigns realized this quarter that will negatively impact growth in Q2. Experiences in dining revenue grew 9% to $36 million. Experiences grew 17%, while dining revenue declined year-over-year in connection with transitioning B2B from a sales led to a self-service approach. Finally, Other revenue was $12 million, which was down 8% year-over-year. We continue to see growth in our cruise offering, which grew 6% this quarter, though declines in our deemphasized offerings more than offset this growth.

Adjusted EBITDA in the Brand Tripadvisor segment was $78 million or 33% of revenue. The 300 basis point expansion versus Q1 of last year was primarily due to increased contribution profit in experiences and lower people costs in sales and marketing and G&A, which more than offset year-over-year increases in tech and content headcount costs to support our strategy as well as higher cloud and licensing costs. Now turning to Viator, where we delivered better-than-expected revenue growth of 23% or $141 million with healthy growth across all points of sale. The timing of Easter holiday as well as leap year contributed approximately $4 million or 3 points of growth in Q1. The majority of this benefit was related to Easter, which resulted in a pull forward of revenue from the second quarter as compared to last year.

Gross booking value or GBV grew 15% to approximately $1 billion, driven primarily by volume growth. The difference between revenue and GBV growth was partly due to the holiday timing, which impacted revenue positively for GBV negatively in the quarter. We continue to prudently balance growth with investment marketing spend. Performance marketing spend as a percent of GBV was flat year-over-year as we leaned into opportunities to drive growth in the quarter. We continue to acquire new customers at scale while consistently growing our repeat customers faster than our new ones. We also see higher-than-average growth in bookings that come to us directly, including our app, and customers who book with us more than 3x who are our most loyal and profitable users.

These trends reinforce our confidence in our customer acquisition strategy and our ability to drive long-term profitable growth as we build category leadership. Adjusted EBITDA loss at Viator was $27 million or negative 19% of revenue, an improvement versus last year’s margin of negative 26%. While margin benefited by approximately 200 basis points from the timing of the holiday revenue in Q1, excluding this impact, we saw solid leverage in variable costs, including performance marketing costs and fixed costs, including people and brand costs. At TheFork, revenue grew 17% as reported and 16% in constant currency terms to $41 million. Growth in booking volume of approximately 10% and pricing growth drove the solid performance. Adjusted EBITDA loss of TheFork of $4 million or negative 10% of revenue was a significant improvement from last year’s loss of $9 million or negative 26% of revenue.

The largest driver of this improvement was lower people costs and direct costs, which more than offset higher cost of sales relating to a contract renegotiation that reduced costs in Q1 2023. Turning to consolidated expenses for the quarter. Cost of revenue increased by 100 basis points due to higher cloud and media production costs at Brand Tripadvisor and the deleverage at TheFork as just mentioned. Sales and marketing as a percent of revenue was lower by approximately 300 basis points due to lower direct marketing spend and lower people costs across all segments. Technology and content costs as a percent of revenue were approximately 100 basis points higher, primarily due to higher people costs at Brand Tripadvisor and Viator. G&A expenses as a percent of revenue increased by approximately 100 basis points year-over-year due to the impact of a $10 million accrual related to a potential settlement of regulatory matter with our Vacation Rentals business.

Not including this impact, G&A was down by approximately 100 basis points year-over-year due to lower people costs at Brand Tripadvisor. Now to cash and liquidity. Operating cash flow was $139 million and free cash flow was $123 million, driven by the timing of working capital and also normal seasonal trends in deferred merchant payables at Viator. We ended the quarter with nearly $1.2 billion of cash and cash equivalents, an increase of $104 million from December 31, 2023. As discussed in our last call, in Q1, we recorded an income tax expense related to the 2014, 2016 IRS transfer pricing settlement, which totaled $46 million. We estimate the net cash outflow will be in the $110 million to $120 million range and will be substantially settled in Q2.

This concludes all open IRS transfer pricing audits under the mutual agreement procedure, or MAP. Turning to thoughts on Q2. We started the quarter with some unevenness in April as we faced weaker demand trends, some of which we believe were due to the Q1, Q2 timing of the Easter holiday. We also witnessed a wide-reaching update to the travel serve that extended for a more prolonged period of time than typical updates that we have seen in the past. This update drove noticeable impact to SEO rankings across categories. While we have progressed at mitigating these changes as we exited the month, we did see an impact April and early May results. Incorporating these trends into our Q2 outlook, we expect consolidated revenue growth to be flat to up slightly year-over-year.

At Brand Tripadvisor, we expect year-over-year declines of approximately single digits – high-single digits. At Viator, we expect revenue growth to step down a couple of points below the GBV growth we saw in Q1. The impact of Easter revenue pull forward into Q1 from Q2 is estimated to negatively impact Q2 revenue growth by approximately 100 basis points to 200 basis points. At TheFork, we expect a step down in growth sequentially to low to mid-teens year-over-year growth due to Easter timing impacts between Q1 and Q2. For Q2, we expect consolidated adjusted EBITDA margins to be close to 100 basis points down from last year’s comparable period with declining margins at Brand Tripadvisor offsetting the improvement in margins at both Viator and TheFork versus last year.

Turning to expectations for the year. Given expected Q2 trends, we’re taking a more cautious view for the full year. We now expect consolidated revenue to grow in the low to mid-single digits and adjusted EBITDA of flat to low-single digit growth. I’ll take a moment to touch base on what this means for each segment. Starting with Brand Tripadvisor. With a little over 12 months behind us since the launch of our strategy, we’re seeing momentum in our operational execution, and we are driving positive trends in our key metrics, which Matt referenced earlier. We maintain confidence in our transformation agenda that we believe will meaningfully impact important drivers of our financial profile as we exit 2024 and translate into improved financial performance in 2025.

We expect in the meantime that 2024 will continue to be a period of transition as we have previously indicated. As such, we expect revenue declines of mid-single digits. While we anticipate stable contribution margins, we expect adjusted EBITDA margins to step back from 2023 levels given investment in people, marketing and technology as we execute on our strategic transformation work. At Viator, we are prioritizing the balance between growth, profitability and market share gains. We continue to expect a step down in revenue growth for the year relative to where we exit 2023, which reflects a tough growth comparable 2023, our transition to full year profitability and incorporates our outlook for Q2 that we just provided. Finally, at TheFork, we expect our profile to reflect our priorities for balanced growth and profitability.

We continue to expect a step down in revenue growth from last year, but to achieve full year profitability this year. We are excited about the year and the opportunities ahead of us. We are confident that we’re making the right investments to drive sustainable profitable growth across all of our brands. With that, I’ll turn the call back over to Matt for a few words.

Matt Goldberg: Thanks, Mike. Before we wrap up, I’d like to provide a brief update on the work our Board’s special committee has been doing. You’ll recall that in our last earnings call, we noted that Tripadvisor’s Board of Directors had formed a special committee to evaluate proposals resulting from Liberty Tripadvisor Holdings’ stated intention to engage in discussions with respect to a potential transaction or other alternatives. The special committee has determined that at this time, there is no transaction with a third party that is in the best interest of the company and its stockholders. The special committee will continue to evaluate proposed alternatives as appropriate. There can be no assurance that any transaction will result, and we appreciate your understanding that we will not take any questions on this topic today, will provide further updates unless we have something definitive to share.

I want to emphasize that the management team and our Board of Directors are excited about the company’s business and prospects and the meaningful value that we can create through continued execution of our plan, as underscored by our solid first quarter results and the initiatives we’ve discussed today. With that, I’d like to turn the call back to the operator to begin Q&A.

Operator: Thank you. [Operator Instructions] The first question comes from the line of Naved Khan of B. Riley Securities. Naved, please go ahead.

Naved Khan: Yes, hi, good morning and thanks. A couple of questions. Maybe the first one on Viator. So we’ve seen a slowdown in Viator bookings for several quarters now and trying to kind of figure out in your language about balancing growth and profitability, how much of the slowdown is really around – from that versus maybe some other changes you might have made, including marketing mix or channel mix or maybe distribution partner channels that might have pulled back? The second question I have is just around the commentary around the impact from SEO changes. How much of that is related from the implementation of the Digital Market Act in Europe? Or maybe if that is unrelated then have you seen any changes due to the DMA? Thank you.

Mike Noonan: Great. Hey, Naved, it’s Mike. I’ll take the first one. Yes, so in Viator, I think a couple of things happening. One, on the growth rate, listen, we’re still pleased with the growth rate. We’re still operating in a very large market that is coming online gradually and has very low awareness, right? And these are things we’ve been saying for some time. And so we’re going to continue to try to drive awareness and drive these users to our services. On the growth rate itself, I’d say a couple of things. We are seeing tough comp, right, as we move through the year, particularly the first half those comps do ease as we move into the second half of the year. I think secondly, from a channel perspective, listen, we continue to see very good growth in our core channels, SEM, Matt mentioned earlier that our app growth is very strong right now.

We have seen, as we called out in the call, some weakness in SEO, and that’s relating to a lot of the changes that have been happening in the travel serve. That takes time to work through, as you know, and that has been one of the impacts. When we look at everything, we still feel very good about where we are with Viator. When we look at the metrics on our dashboard around, like I said, growth in our main channels, our pay channels. We look at conversion rates, we look at our repeat rates, we look at where we are playing in the auction rankings, we look at our brand awareness, we all feel good about all those metrics. So I think the growth rate is just more of a factor of some of those things. And again, as we always have an eye on moving and keeping the consistent profitability as well, it’s really more of those factors.

Matt Goldberg: Yes. And I think – I just think the growth, you do see some external demand that’s going to be playing out in travel. Viator continues to make, I think, smart marketing investments, and we’re very excited about the impact of the brand spend, and we’re seeing really good, particularly in Q1 results on that spend that give us a full funnel point of view on how to think about that marketing mix. And I think not only are we driving aided-unaided awareness and consideration hitting our goals for the year in very short order, very efficient spend and driving real impact over the last three months. We believe we’re outperforming others in the space on that spend and expect that, that performance is going to accelerate as we enter the high season.

But you’re finding a place – we’ve come in off of 49% growth last year. And so you’re finding a place we’re getting the mix right and thinking about what is the right level of growth to balance those three things, growth, profitability and market share. So we feel good about the choices that we are making there and the various channels. Now you asked about Google. And I would just say on Google, there’s a ton of stuff going on. There’s the surf change. There is, of course, the implementation in Europe around the DMA. And of course, there’s a whole host of other things that happen in that product all the time. As it relates to the DMA, in particular, we’ve been monitoring it from the start. We’re fascinated to see how the European Commission is investigating on Google’s compliance with the prohibition on self-preferencing.

And of course, our teams are always adapting and adjusting in real time very quickly. And I think they do a very good job to mitigate impacts very quickly. But we can’t put the DMA changes and directly correlate the impact on us. What we do is we try to optimize our position with that important partner and continue to drive our strategy, which is actually about diversifying and driving our product to get more engagement, so more people come direct, download our app and engage with us and fuel our monetization. So we feel like we’re on a very good path there. Thanks, Naved.

Operator: One moment for our next question. The next question comes from the line of Ron Josey of Citi. Ron, please go ahead.

Unidentified Analyst: This is Robert on for Ron. Thanks for taking the question. Two questions on Viator. I guess, first, how should we be thinking about the puts and takes on Viator’s take rate in the near-term? And then as the platform continues to scale and kind of becomes the larger part of the company, how do you see take rates evolving over the medium-term?

Mike Noonan: Hey, Robert, it’s Mike. I’ll take it and Matt can chime in. So like, listen, I think take rates are indicative of a lot of things. They’re indicative, I think, of the value that we provide to our suppliers and our ability as a platform to bring far-reaching users to our suppliers and operators that couldn’t reach them otherwise and we do that with marketing, we do that with sophisticated tools, we do that with investment to make that process easy and discoverable. And so I think the value is a tremendous value we give to a lot of small businesses and operators. And I think, first and foremost, that’s reflected in that take rate. We also – and I think some of the take rate movements upward, I would say, over the past year, have been around a lot of programs, additional programs we have been doing that give even more power to the operator to say, hey, I have more choice and ability to choose around what I want to pay for different advertise options on our platforms.

And we’ve seen tremendous uptake in that – in those products where our suppliers voluntarily pay us higher for different advertising opportunities. And so I think it really just gets back to that value equation that at the most fundamental level, what we’re bringing the demand we’re bringing to the operators and then their ability to manage their demand on our platform. We feel really good about and we think that’s sustainable, right? We think that’s sustainable. And we’re continuing every day to work on how we provide value to the operators, how we make their business better. We monitor that very closely and are happy with the progress thus far.

Matt Goldberg: Yes. And the only thing I would add is take rates are not an objective function in and of themselves. We are not targeting a particular take rate. It is an output, and it is an indicator of the value that is being delivered. And so as Accelerate, the program has been innovated over time, we’re able to give more demand, more control, better insights, competitive intelligence, detailed performance metrics and the ability to dial up and down participation at any time which is valuable and is what’s really driving those take rates. So that’s how we think about it.

Unidentified Analyst: Got it. That’s helpful. And then second one, just on supply trends. Can you maybe elaborate on recent supply trends across Viator? Are there any reasons in particular that you would call out where you’re seeing better-than-expected growth? Any color there would be really helpful.

Matt Goldberg: I’m sorry, Robert, we didn’t hear the question. What trends you’re asking? We just couldn’t hear you clearly.

Unidentified Analyst: Yes, supply trends. Just any color that you’re seeing by geography or more broadly would be really helpful there.

Matt Goldberg: Look, we don’t talk in too terribly much detail at a granular level about our supply trends, but obviously we have the largest supply available anywhere for experiences in the digital world, it’s a factor of multiples to the next closest. We don’t think that quantity is the final answer. We actually think quality is incredibly important. And so we are very focused on making sure that we have the highest quality supply. And actually, when we look at our ratings and we see the way that customers are rating them and coming back, which is typically between four and five stars on average, we think that we actually are the highest quality supply available anywhere on the web. And so you combine those two and then you think about how we’re able to provide coverage globally.

And then, of course, by geography, market by market, it really gives us an advantage in our ability to deliver coverage. And so they continue to grow, it continues to be strategic for us and we are very focused on supply demand matching. And so we’re really excited. And I just want to compliment the teams for the work they do every day to make sure that we are leading the pack.

Unidentified Analyst: Great. That’s helpful. Thanks a lot.

Angela White: Felicia?

Operator: [Operator Instructions] The next question comes from the line of Niall Mitchelson from Bernstein. Niall, please go ahead.

Niall Mitchelson: Hi there, thanks. Could you sort of delve into how you plan to tackle the Liberty Tripadvisor structure? I mean you’ve got a reasonable cash position on your balance sheet. Could you do a buyout of the trip stake [ph] book, maybe a special dividend? Is there something we can do sort of help collapse that structure?

Mike Noonan: Yes. Hi Niall, this is Mike. Yes, I think we’re going to avoid kind of diving into those types of questions. Obviously, we heard the announcement we just make on the special committee process. They’re still evaluating their alternatives, but that’s really all where we can really Liberty to say at this point. And certainly, I don’t want to speculate on what could or could it be. Matt?

Matt Goldberg: Yes. I mean the special committee continues to do its work. I think what we are doing is making sure that we have no distraction and that we continue to drive our business forward and the consistency with which our teams have continued to deliver has really just given me great confidence that we will deliver on our plans. And when I think about what we said we were going to do, as we built out a foundation, as we developed our strategies, this is a year where we continue to look at what’s working and how we accelerate it and really around the corner going into the next year and a multiyear strategy situation for Tripadvisor and then, of course, continuing to drive growth and leadership in our growth businesses at Viator and TheFork. So for us, it’s about staying focused, consistent and continuing to build confidence in where these businesses are going.

Niall Mitchelson: Understood. Thank you very much.

Operator: [Operator Instructions] The next question comes from the line of Doug Anmuth of JPMorgan. Doug, please go ahead.

Dae Lee: Thanks. This is Dae on for Doug. Thanks for taking the questions. I have two. First one, appreciate the color you guys gave on Viator revenue and understand the eastern dynamic [ph] there, but could you talk a little bit more about how Viator GBV growth has been trending and if that should be accelerating in 2Q and in the back half?

Mike Noonan: Yes. Dave, it’s Mike. We don’t guide to GBV. Well, listen, GBV is going to be obviously a more forward-thinking – forward-looking metric. We do think it’s going to be trending roughly is in line with how we think about revenue growth for the year, right? Obviously, with some timing differences quarter-to-quarter, as you’re well aware of. So, I don’t think that there was going to be over a longer period of time, call it the full year a big discrepancy between the GBV growth and the revenue growth other than normal things around council rates and things like that. So that’s – I think that’s just the way we’re thinking about it.

Matt Goldberg: And you just have to remember that we’re playing in such an exciting total addressable market with real durable secular trends, and there are multiple levers for growth. And just the shift from off-line to online and the opportunity for OTAs to step in and structure and unstructured fragmented market, that opportunity continues. It’s ahead of us. There are geographic expansion opportunities. They are a category opportunities, and we just really like our positioning and the sort of – what we’re seeing from consumers as we continue to look at these cohorts. So that continues to be very exciting for us.

Dae Lee: Got it. And as a follow-up, looking at Brand Tripadvisor, could you remind us, what’s going on clicks volume it will come in a more medium term. How should we think about – I guess, how should the work you’re doing to transform this out of the business show up in your Brand Tripadvisor results?

Mike Noonan: Yes. So I’ll take the first part around what’s weighing on click volume and then – and Matt, we can talk about the strategy piece. So, I think we’ve been pretty consistent around click volume and this is different than obviously, traffic, but the click volumes at Brand Tripadvisor. You’ve got a couple of things, right? One, as we think about all the SEO changes that have been made through the years, that puts just kind of secular pressure on those – on the clicks and the free channels. When you think about the paid channels over time, you’ve had one, more and more paid products; and two, more and more kind of competitive intensity in those, which again puts pressure on that. I’d say a third big point, and we’ve said this consistently too, which is a lot of the – some of the pressure we put on clicks is done by ourselves, meaning we introduce products or features that may put pressure on actual clicks, but what it does is it results in a higher qualified clicker that comes through.

That higher quality clicker should push through higher pricing. And we have seen consistently, and we’ve been talking about this for some time, while we’ve had a pressure on volumes, clicks, we’ve had very nice price increases year-over-year, and we continue to see that even in Q1. So again, some of that is very much strategically borne by us. That’s the fact. I don’t know, Matt, I’ll turn over you talk about the strategy piece.

Matt Goldberg: Yes. And I think you put your finger on exactly what excites us most about the transformation work that we’re doing because we’ve all known for a long time that Meta is not going to be the growth driver of our business. That’s been clear for nearly a decade now. As we brought that business back coming out of the pandemic, and we realized that it is highly relevant, highly qualified traffic for our partners, and they will continue to lean into it. We’ve identified a strategy where we reinforce the relevance of the Meta business, drive the value through product changes, by leveraging data, thinking geography by geography how we can be the best partner to our partners in Meta. While focusing on a strategy that you can see the results in our product and the changes that are happening around how we are looking at engaging travelers.

We are now focused on the highest value users coming to our site, and that’s people who come and our members who have 5x, rather, I should say 10x the value of non-members. We’re focused on those users who are going to be downloading and using our app and really thinking about how we diversify and fuel through that very high value in a lifetime value perspective on those users where they are engaging, they’re driving monetization through media where we have not even started the meaningful work to diversify our media business yet. That business has been growing in double digits last quarter and last year. And so we can do that as well as become much better at matching supply and demand. And I think you’ve seen it in the growth we’ve delivered in experiences.

You’ve heard the proof points that we’re talking about around trip planning, being able to match supply and demand. And of course, as we see a diverse set of travelers coming to us for hotels, experiences and restaurants, understanding what they’re coming to us for, and then driving the monetization by being more predictive and leveraging data and analytics to drive that. And again, the proof points that I have laid out consistently and built upon quarter-by-quarter suggests that, that engagement is happening, it’s flowing through to higher levels of monetization. And your question is a great one, which is, how does that grow to be the diversified set of revenue streams that’s going to drive sustainable growth in the future? And I think we’ve been clear, this is the year, which is the transitional year.

We prove out this strategy, and we go into the coming year and really see the impact in our financials. That’s why we introduced our KPIs that we’re starting to track. And you’ll hear us talk more about that in quarters to come. So we’re super enthusiastic. We recognize that it may not happen as fast as some out there might wish. But again, just over 12 months into this strategy, we’re making good progress.

Dae Lee: Great. Thank you. Look forward to it.

Operator: One moment for our next question. The next question comes from the line of Jed Kelly of Oppenheimer. Jed, please go ahead.

Jed Kelly: Hey, great. Thanks. Thanks for taking my question. Just two if I may. Just sort of some of the trends you called out in Tripadvisor core, have you seen any change in travelers’ behavior or any change that kind of implies like some weakness in the consumer? And then just on Viator growth, can you help us parse out where we should expect on a geographical basis, the growth to come from? Is it still going to be in the U.S. or are you seeing better traction in Europe? Thank you.

Matt Goldberg: Thanks, Jed. Appreciate the question. I’ll take the first one around the consumer. As I mentioned, we haven’t seen anything in our proprietary data that suggests that behavior is changing. There is healthy demand data suggesting that the summer high season that the intent to travel is very high. And we’ve seen some of those key metrics that we look at hold. Of course, we continue to monitor the macro. And I think we mentioned we saw some unevenness in April with the start to Q2 around demand trends and a whole bunch of things that are hard to parse between algorithms and overall macro and what – some of the things we are actually doing to progress our product that we know can create noise. But I think as we look ahead and we watch what’s happening with inflation and cost of living, and how consumers are likely to behave based on their own personal balance sheets.

And we also, like everyone else see the same mixed signals and potentially a normalizing growth environment for travelers. We still see intent to travel high. And the data suggests that the high season is going to be an exciting one like in the past couple of years.

Mike Noonan: Yes. On question two, for Viator growth by geo. So our primary markets are still English-speaking markets and primary market is North America and obviously, the U.S. And we remain very focused on growing that market. It’s the larger travel market, making sure that we continue our wide margin of competitive leadership here, and so we’re very focused on that, and so all our comments are really more around the North American geo, Jed. I think we certainly have the opportunity to think about how we move into other geos and think deeply about that, and we want to do that in the right way and think about that in terms of maintaining a financial profile that is attractive, but that’s more of a future state for it now.

Jed Kelly: Thank you.

Matt Goldberg: Yes. Thanks Jed.

Operator: [Operator Instructions] The next question comes from the line of Vince Cipiel from Cleveland Research Company. Vince, please go ahead.

Vince Cipiel: Thanks so much. Curious if you could touch on the cost save plan that was lined out for this year. I think most of it flowing through Brand Tripadvisor and then some TheFork as well. That’s still in place? And then based on the guidance commentary today, it feels like there might be a number of offsets in terms of investment areas and maybe you could speak to what those are?

Mike Noonan: Yes. Hey Vince. Yes. We have basically two programs at both brands. The $35 million that we cited last year was at Brand Tripadvisor about $10 million at TheFork. At TheFork, we do expect and are seeing those savings flowing through, and that’s an important part of the their profit journey this year. At Brand Tripadvisor, I think, we think – hopefully we’ve been very consistent on this, is that we made some very difficult choices last year that really gave us room to execute on our strategy, right? And a lot of the cost savings were around some of our go-to-market areas that we talked about and referenced in the script even. And then we sit back and think about how do we think about what we need to execute on our strategy?

And while that, those savings gave us the ability to think about redeploying in areas that we need to execute on our strategy. So that would be things like data scientists, engineers as we were really ramping up our test and learn environment. We’re really ramping up product development in ways that I don’t think we’ve seen before here. And so the strategy, the savings, I think are very much being used in a way through new hires, through backfills, backfills into different roles into the some of the data engineering technology roles and as well as we’ve referenced we are on a journey – continued journey of migrating more into a cloud-based environment with a more modern tech stack across some of our businesses, and that’s some areas we will continue to invest in over time.

So we think it was the right move. It gave us the ability to be flexible to balance into some areas on people costs that we needed to lean into, and we are continuing to do that.

Matt Goldberg: Yes. And you’re seeing it show up in strategy in the form of, obviously the humans that can do the things that we are starting to do that are new and unique, but also the ability to generate LTV-based marketing programs. You have to have your data and your data science in place to do that, and we expect that to deliver performance for us over time. And as we modernize our tech stack, obviously, that allows us to move faster. You always want to be as agile and fast moving as you possibly can. Well, those kinds of investments are required to get to the speed that you want to get to. So it’s something we’ve thought very carefully about. We didn’t do these things haphazardly, and I think we were very consistent that our goal here was to maintain the flexibility to deliver on this strategy.

Vince Cipiel: Great. And then maybe one more on the cost side and zooming in a little bit closer to the Viator segment. Last year, I think revenue growth is really impressive, but the costs were up about as much. I think it was $240-ish million or something like that. And we almost saw a similar dynamic here in the first quarter, where I think revenue was maybe up $26 million, but total costs were up $23 million. So just as we move through the course of this year, would you expect cost growth to pace close to in line with the dollar revenue growth that you envision? And I hear you on profitable for the year, but profitable could mean a lot of different things for Viator.

Mike Noonan: Yes. So a couple of things. We are expecting margins obviously to improve, right? So that tells you a little bit just on the relative growth rates. Yes, I think when you look at that analysis just compare year-over-year, I think just remember there’s a couple of things there. It’s not all just marketing dollars in terms of performance channels, right? There are other things that we’re doing to continue to invest in Viator. That could be, and more some of the fixed and discretionary costs like brand marketing and like people and products. So we are continuing on a journey. As Matt talked about, there’s a ton of just product innovation, we’re continuing to push at Viator, which we’re very excited about. And we are hiring people and advancing technology in those areas. So there are investments still being made along product supply and not just all variable costs in marketing and I think that’s the point.

Matt Goldberg: Yes, you’ll see us continue to be very strategic in our approach about how we trade off those various investments. And we obviously are excited about acquiring new customers and what’s happening with our cohort. So, we’ll do that. We’re thinking about the way that we look at marketing mix over time. But the product investments are also a very exciting area for Viator, right? We’re very focused on leveraging the data asset that we have across Tripadvisor Group, where there’s 3 billion profiles to leverage, and that will really help Viator drive personalization and I think drive conversion. Very focused on the app because of its ability to really drive that kind of loyalty and repeat and conversion. Obviously, focused on a rewards program that rewards repeat behavior, thinking about supply and how we really serve our suppliers and the operators.

And then, of course, thinking about how to take advantage of AI and drive that to deliver both productivity and enhancement. So there’s a lot of excitement there. And I think what you’re seeing is – and when we say balanced growth, profitability and market share, we really mean it. We’re in this for the long haul and Viator it can and will be a winner in experiences for the long term.

Vince Cipiel: That’s helpful. Thank you.

Matt Goldberg: Thanks, Vince.

Operator: One moment for our next question. The next question comes from the line of Tom White of D.A. Davidson & Co. Tom, please go ahead.

Tom White: Great. Thanks. Just wanted to follow up on the travel SERP changes you touched on. Curious whether that’s impacting Viator at all this quarter? And I guess on Viator, how are you guys feeling about kind of the direct traffic mix or mobile app mix for that asset. How does that kind of rank up relative to maybe Brand Tripadvisor? And how do you improve that going forward? Thanks.

Mike Noonan: Yes. Thanks, Tom. It’s Mike, I’ll take it. On the SERP changes. So listen, there’s been a lot that’s been happening on this. And had some updates even at the end of last year. So, we’ve been kind of seeing a lot of these changes flowing through. When anything impacts kind of SEO, it’s going to impact our brands to play that, right, and look at – and the traffic that comes to that for sure. We have great teams that work and do great work to mitigate and work through this, and they’re in the process of doing that and Brand Tripadvisor has been doing that for some time. But it takes time, right? And it takes time to readjust when things change like that. So, I would say, yes, the changes have impacted SEO, and I cited that a bit earlier.

And we’re, again, still very pleased with what we’re seeing in other channels. And as you get to what you referenced, our app channel is growing very fast. Our main SCM channel is still growing fast. And again, that’s a big channel for us to acquire new users, right, and start the process of new user to a repeat user. So, we still see healthy channels across – by healthy performance across the other channels. But do not, yes, there are some headwinds in the SEO.

Matt Goldberg: On Google, I got to just say we are a partner to them as well. And I want to say we talk to them all the time. So we feel that if you’re going to react to how Google is making changes, we’re in a very good position to do it across the group, and that’s true to think about how we work with them in the future organically for both Tripadvisor and Viator and I think that’s an advantage of the group. You also have to remember on the channels for Viator. I said it in my upfront comments, Viator benefits from this direct relationship with Tripadvisor where more than a third of our many hundreds of millions of travelers each month are coming shopping for experiences. And really leaning into that channel and how to optimize it over time is one that creates, I think, tremendous opportunity and upside for us.

And of course, we’re also doing a lot of product work and investing to make sure that the app, which is our fastest-growing surface, our most loyal surface. We’re seeing healthy improvement in app conversion; it’s still a smaller base, but again, tremendous upside and headroom for us for the future. And our app downloads are growing at a very high rate and the performance on the app is going well. So we really, really like that and plan to lean into it. Thanks for the question.

Operator: Thank you. We’ve met our time commitment, our time limit. So now I’d like to turn the call back over to Matt Goldberg for closing remarks.

Matt Goldberg: Thanks again to everyone for joining us today. We’re looking forward to executing on our 2024 plan and continuing to drive our initiatives forward. See you with the next update.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.