Good day, ladies and gentlemen, and welcome to the TripAdvisor Q4 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Will Lyons. Sir, you may begin.

Thanks, Sam. Good afternoon, everyone, and welcome to TripAdvisor's fourth quarter and year end 2013 earnings conference call. I'm Will Lyons, Senior Director of Investor Relations for TripAdvisor, and joining me on the call today are our CEO, Steve Kaufer; and our CFO, Julie Bradley. Before we begin, I'd like to remind you that estimates and other forward-looking statements included in this call represent the company's views as of today, February 11, 2014. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and TripAdvisor's filing with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. You'll also find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call in our Q4 earnings release, which is available on our IR site, ir.tripadvisor.com. Finally, unless otherwise stated, all references to selling and marketing expense, general and administrative expense and technology and content expense exclude stock-based compensation and all comparisons on this call will be against our results for the comparable period of 2012. With that, I'll now turn the call over to Steve.

Thank you, Will, and welcome, everyone. 2013 ended on a very strong note punctuated by broad based growth across our entire product set. Growth to our click-based and display-based revenue accelerated sequentially in Q4 and was complemented by continued growth in subscription transaction and other revenue. This resulted in full year total revenue growth of 24% and adjusted EBITDA growth of 7%. We are very pleased with our financial results but are even more excited by our continued strong traffic and content growth given our global scale as well as successfully transitioning the core business to meta, a transformational part of improvement we made to dramatically enhance the hotel shopping experience on TripAdvisor. Top of the funnel metrics remains strong as total traffic to TripAdvisor sites grew 50% during the quarter and 55% for the year with more than 2 billion unique annual visitors in 2013 according to Google Analytics, a testament to our global brand building efforts and powerful network effects. Hotel shoppers grew 25% in the quarter and 36% for the year with notable strength in our core U.S. and UK markets. Internationally, we rolled out four new points of sale in 2013 and we're pending to roll out eight more in 2014, delivering a more localized experience to international users. Our members are more engaged than ever contributing nearly 50 million reviews and opinions in 2013, increasingly coming from international users in foreign languages and via mobile devices. We recently launched new member profile pages on our website more prominently showcasing members' contributions in iconic bubble rating, a theme that also shines through in our full site brand refresh and our TV ads. This year, we are integrating photos from our recent Oyster acquisition into TripAdvisor. We're working on a more engaging member experience on mobile, and…

Thank you, Steve. Hello, everyone. Fourth quarter total revenue growth of 26% was broad based and well ahead of our internal expectations. Currency also provided a 1.5% tailwind to total revenue this quarter. On the bottom line, as expected, adjusted EBITDA growth slowed to negative 19% versus positive 17% in the year-ago quarter due to the high concentration of TV ad spend this past quarter. Click-based revenue growth accelerated to 17% in the quarter, driven by hotel shopper growth of 25% and stronger pricing from our high value meta leads. This was offset by continued headwinds from smartphone and international traffic growth with smartphone impact intensifying on a relative basis, given continued strong hotel shopper growth on that device. As for meta's impact, we're winning on all fronts. We've seen more bidders per property on average, more properties with at least one bidder and increasing CPCs as a function of greater competition in the option and that the meta option has had enough time in the marketplace that the value to partners can be realized. Add in some onsite conversion and we are pleased to say that we believe the meta transition achieved revenue neutrality in December. While this is obviously a great way to end the year, it drives on two facts that I had mentioned on previous calls. First, our motto is highly sensitive to pricing. And second, CPCs can fluctuate widely in a short span of time. Nonetheless, we are pleased to see the positive trends continue thus far into 2014. On the unit growth side, 25% retail shopper growth is a solid outcome up against strong growth rates in the year-ago quarter and 50% total traffic growth for Q4 signals' continued strength at the top end of the funnel. For full year 2013, 36% retail shopper…

Thank you. (Operator Instructions). Our first question comes from Lloyd Walmsley of Deutsche Bank. Your line is now open.

Thanks, guys. I'm wondering if you can just help us understand the hotel shopper growth number in the quarter and kind of with your outlook. It looks like it decelerated a bit more than we would have expected particularly with the ramp in direct marketing spend and yet the click-based revenue line and the revenue guide was much stronger even if you kind of zero out the meta drag, so with a lot of the deceleration in markets that were not really monetized really well and thus have a lower impact on the click-based revenue, if you could help us understand that? And then on the booking path side, just wondering if you could give us an update on the timing of facilitated booking in smartphones?

Sure. Thanks, Lloyd. Certainly, two good questions. The hotel shopper growth – the first thing as we call that really was a tough comp in the prior year, and we will be facing a similar tough comp in the first half of 2014. So, we were really thrilled that we had seen such strong growth previously with this overall scale in which we're operating. So when we look at – at the current growth rates, we think they're more down to, hey, this is what reality looks like for a business of our size. The fact that we were able to continue to deliver some nice click-based revenue growth on that hotel shopper is not only the dissipation of those meta headwinds, but also the onsite conversion work that we had been doing, and the other kind of normal operating parts of the business. So we see that as trending nicely not only at the end of 2013, but also through January 2014. So on the booking path part of the question, we don't have a specific timeframe that we're ready to release yet. We're happy with the progress that we've made. We're a company that sort of prides ourselves on growing quickly. I'll make the note specifically because we've been talking about the meta headwinds and are overcoming those to just make sure folks understand that while meta was truly transformational for the company, a phenomenal win for our travelers, and after our choppy waters, a great win for us now as we look forward to being positive on the meta transition. It was difficult for us and our partners to do that full conversion from the old click style to the new meta model. We didn't give anyone really the choice to not participate. If you wanted to buy lease from TripAdvisor, you had to move over to the meta model. Assisted book is much more of an optimization of what we're able to do on the phone releasing the friction on all the rest of the reasons we've described, but to be clear we don't require anyone to do it. The product will still work just as well as it does today if assisted book is there or isn't there. Obviously, we expect it to be positive, but it's much less of a dramatic change for our partners and frankly much less for TripAdvisor ourselves. And so the timeframe for us to get assisted book to be successful and a positive driver for our travelers in 2014 is just a lot less urgency than what we were facing in 2013 with the meta transition.

Just as a follow-up, when you say the onsite conversion is better, is that just getting users who land on the metasearch pages to interact more with the monetizable clicks through to the OTAs?

Yes, and it is whether they are landing on the metasearch pages or frankly anywhere on the site, we made some nice progress in getting travelers to move down the funnel to both check more prices on properties as well as follow through and actually click through to our clients, and one of the things that we theorize on the backs of increased CPC from our clients is that the lead that we're sending folks as of now is better. They are more valuable that we might have been sending them six months ago based upon the work that the team has done on the site, so a more qualified visitor leaves TripAdvisor further down the buying cycle in their mind, and so when they land on a partner's site, they're more likely to finish the transaction. We also just have a lot more or many more clients who are active in the auction on many of our different forms of sale, so that extra competition I'm sure has played a part in the price increases that we've seen recently.

Thank you. Our next question comes from Mark Mahaney of RBC Capital Markets. Your line is now open.

I'm sorry, can you hear me?

Yes.

Sorry about that. Can you just give any color on your hiring of the creative ad campaigns, your thoughts on how the TV ad brand campaigns have been going so far? And then there was a real quick reference in the press release to maybe one-time items or seasonal items in the display advertising number in the December quarter. Could you just put a little more color on what those were, what those may have been? Thank you.

Sure. Thanks, Mark. The TV ad campaign, we were pleased to be able to see in all four markets results in terms of the main direct traffic and awareness surveys that we had conducted. So this was our first foray into TV at any magnitude, and we were pleased that what we had put together delivered to the market, delivered results on the site. As with anything we do, we look to iterate , expand, drive more efficiencies, and in the case of our campaign, we're looking for perhaps a harder hitting campaign, something that's going to be a bit more memorable than some of our commercials. I think what we delivered was an excellent beginning and now we look to the team and say, great, we've got our feet wet. We clearly – we can measure our success there, so now let's go in for some more. And if you recall when we first talked about TV, there was the, hey, we'll try it and if we can see signs that it's working, we'll continue. Well, great, we saw signs that it was working and now we're looking to continue and optimize. In terms of the fourth quarter display items, we were getting supplies on our own forecasting ability that a couple of larger orders dropped into the quarter that hadn't been part of our normal forecast. For whatever reason, Q4 tends to be tough for us to get an accurate read on. In Q4 2012 it was tough. In Q4 2011 it was good, so we've been seesawing a little bit. And so anyway we're pleased to have it. When we look at our 2014 forecast, we're not baking in another big quarter due to big items coming in, in the fourth though when we look at the whole year, we feel that display had a pretty good year. There's certainly the notion of kind of year-end budgets being flushed, for lack of a better word, on CPM and other display campaigns. We probably got a piece of that but in prior years that either hasn't happened or we missed a piece, so it's a big tough for us to forecast accurately.

Thank you, Steve.

Thank you. Our next question comes from Mike Olson of Piper Jaffray. Your line is now open.

Hi. Good afternoon. As far as the assisted book on the mobile initiative, how are hotel and OTA partners reacting to that? Do the partners have any I guess concern about not having those shoppers coming into their environment or do they not really care as long as they get the booking?

Good question. So it's tough to generalize all partners. If I were to characterize in general, the supplier community in general says, great, we're happy to take the booking. We're going to service the customer and the fact that it happens on – in your app, no issue from their perspective or relatively – that's more of a technical connectivity, how do we get it all done than a philosophical question. A number of the OTAs, online travel agencies, people are excited to have their inventory as part of the store. Don't really care whether it's on their site or our site. Again, they get the customer, they get the market of the customer, they get to email and otherwise own the customer for lifetime, so again happy with that side of OTAs. There's a handful of other online travel agencies that might prefer us not to change the model because they're perfectly happy getting the clicks themselves and preferring to drive more app downloads or other activities that they wouldn't necessarily get as much of a chance to do if we're taking a transaction. So, I think many are saying, well, we understand why you're doing this TripAdvisor. It is in the name of providing a better customer experience, so we'll give it a try. And clearly that's what we're looking for. We feel that a customer experience especially on the phone is something that we have to address. From our perspective there isn't really much of a choice in the matter and I think all of our clients are quite sympathetic to that line of reasoning.

Okay. Thank you.

Thank you. Our next question comes from Douglas Anmuth of JP Morgan. Your line is now open. Bo Nam - JP Morgan Chase & Co.: Hi. This is Bo Nam on for Doug. Thanks for taking our questions. A follow-up to the TV ad spend in 2014, do you see a strong correlation between the TV ad spend and hotel shopper growth and do you think that can help the growth once you pass your tougher comps in the first half of the year? And then kind of related to the traffic, when you think about the other parts of your traffic that are non-hotel, do you have any plans to further monetize that or be able to generate some growth from that? Thank you.

Certainly. To the question of TV driving hotel shopper growth, yes, we would expect meaningful campaigns to start to drive growth in hotel shoppers. There is just a lot of big numbers out there at the size of which we operate, it's a bit tough for TV to be able to drive a meaningful enough amount of domain direct traffic. Our challenge and the challenge of anyone viewing TV is being able to measure the overall lift. We're savvy enough or we believe we're savvy enough to want to look at TV spend and the overall branding spend on the much longer term basis. So when we made the decision to continue TV in 2014, we're looking at establishing more of a presence on TV as opposed to a big concentrated buy which in Q4 was October and November kind of specifically. And the reason we did that heavy concentration is because at a certain point of time, we would be able to best measure against our very large denominator of traffic how well that TV worked. Concentrating the buy in such a short period of time was not the smartest by way of driving the overall efficiencies but it did make it easier for us to measure which is why we did that. So going forward, now that we're able to measure, we're able to see a bunch of the lift that we were looking for. And while it's still a bit murky as to how TV has helped all the rest of our channels, we're believers to the point that we've allocated spend in 2014 going forward. It's always going to be little hard at predict for us to answer definitely, hey, how much was your TV spend – what portion of your hotel shopper growth is driven by your TV spend? We will certainly be learning more as we do and we'll be continuing to experiment in presumably some big markets and small markets to learn more and become more experts at the type of TV advertising that drives business in the travel channel. So the second question monetizing non-hotel traffic, certainly we have a lot of it, it is growing, it is extremely worldwide. We do have an eye on that category. We see it as kind of nothing but upside with very little in our plan currently in terms of being able to drive more revenue. We don't currently have internal metrics that revenue per non-hotel shopper sort of thing. You can tell we'll be much more (indiscernible) when I start to talk about metrics like that. But in the meantime, suffice it to say it is in our thinking. We recognize that there's a lot of traffic there but our hands are full. We have business listings coming out of meta, further optimizing the hotel shopper simply because it's a larger growth opportunity for us right now. Bo Nam - JP Morgan Chase & Co.: Great. Thank you.

Thank you. Our next question comes from Nat Schindler of Bank of America Merrill Lynch. Your line is now open.

Yes. Hi. Thank you for taking my question. When you mentioned the revenue neutrality in December for meta, that was right in line with your original predictions, but much better than your predictions from last quarter. It sounds like that change occurred mostly on the pricing side. Have you done much to address the problem of breakage, which you mentioned as a headwind for you, as of last quarter?

When we were last on our call summarizing Q3, we were looking at an option that hadn't quite developed the way we had expected and it was a bit of a mystery to us as to whether pricing would recover to the level that we thought it should. After all we only have partial visibility and we had built our year plan around a much stronger recovery. By the time November rolled around, October-November – November specifically we had started to see some pricing increases and December saw a pretty nice lift using – again most price but some conversion using that revenue neutrality and stuff has continued to head in the right direction in January. The breakage – we didn't do anything specific to address the breakage. I think assisted book really takes care of the issue. We can theorize that the meta experience has pulled more people back to TripAdvisor for that second purchase and so we're benefiting a bit more from that. You can theorize that because we're showing all sorts of different pricing on the page and people are getting used to that, that people are sticking around and clicking three more, but we have to be honest with ourselves. We just don't know that part. We're thrilled that the leads as pricing would indicate are now at least as valuable if not more valuable than they were before as our metric of revenue per hotel shopper is up year-on-year at this point.

Great. Thank you.

Certainly.

Thank you. Our next question comes from Tom White of Macquarie. Your line is now open.

Great. Thanks for taking my question. A couple on TripConnect. Maybe you could comment on how we should think about increased participation from some of the smaller hotels affecting CPC pricing in the auction, and I believe hotel needs to be a business listing subscriber to participate. So should we expect it to maybe impact that subscription revenue line before the CPC revenue line? And then just a clarification. If 2015, your main product focus is TripConnect, does that mean that there will be no sort of assisted booking path product on desktop next year? Thanks.

Sure. So I'll try to answer from my notes and then if I miss one, please pop back on. Small hotels do require business listing, independent hotels do require business listing in order to participate in TripConnect. That certainly does limit the opportunity at TripConnect for this point of time. We have over 65,000 properties that we've connected via Internet booking engines. So as an independent hotelier you are one of those 65,000, you can now go buy business listing if you don't already have one and start buying traffic on a CPC basis. We think for 2013 we probably had more of a lift from driving additional business listing sales than the actual CPC generated by the clients that had started CPC bidding in fourth quarter. We'll see what the net answer to that would be next year or 2014. And it's clearly our long-term goal to grow that number and establish those relationships with the independent hoteliers on a per click basis. So the 2015 is kind of TripConnect, the big product plan I'd say it is a piece of the long-term strategy to be able to establish ourselves as a major traffic in a booking driving channel for these independent hotels. I certainly wouldn't call it the only part of the product strategy for 2014 or '15 we have with a personalization initiative, we have many other things in the hopper. Assisted book we are fully committed to it for the phone in 2014 and we're saying, hey, we'll wait and see how it goes before we make any comments or commitments to ourselves as to launching that on other platforms. We're building it in such a way that if we wish to launch it on other platforms, we will be able to with a smaller amount of effort than the initial implementation on the phone. But it's really aiming at the phone that has been what's been driving the initiative. Monetization rate on the smartphone just isn't where it should be given the growth of traffic and the assisted book helps – we believe will help us get to more our fair share of those mobile transactions.

Good. Thanks for the call.

Thank you.

Thank you. Our next question comes from Anthony Diclemente of Nomura. Your line is now open.

Thanks a lot. Sorry, I guess, if I should know this but can you just remind me, does the hotel shopper metric include users to TripAdvisor's native applications?

Great question. As we look at that it does include shoppers on the TripAdvisor mobile website but due to essentially some challenges around the moving from – how to explain it – we had over the course of the year a native app that was partially what's called a web view. So it uses some web pages as part of the app and so those were counted naturally I believe as part of the hotel shopper metric. When we launched the full native app, for those that downloaded the full native app, those would not be included in the hotel shopper metric. It's not that they shouldn't be but because technically we're not able to do that at this moment in time. Hotel shoppers also don't include our hotel shoppers on Daodao, our China website. They don't include to the best of my recollection or need of shopper on Android as well as iPhone…

I guess what I'm getting at is – for people you mentioned the tough comp but for people who are asking about the deceleration in hotel shoppers, isn't it safe to say that there is some mobile app-only users of TripAdvisor that are not being captured in the year-over-year growth rate? And that's what could be an explanation for modest deceleration in the hotel shopper metric?

That's certainly a fair point and that would certainly account for a bit. Again, the factors in there are the amount of our mobile usage app versus web and the timing over which people move from the partial native app to the full native app and we didn't go back and look at that. When we report in – over Q1 as we will have had a full quarter of fully native, I think we will have a bunch of that tracked at that point and a great question to revisit. But the short answer is I think you're right. I'm missing some hotel shoppers from that number there.

Great. Thanks. One more quick follow-up, if I may. Steve, can you just update us on how investors should be thinking about Liberty's decision to spin its stake? If you can just maybe update us on the timing and talk about the outcome there. Thanks.

I don't really sort of pay much attention to it. They're a wonderful controlling shareholder for us. There's an entity changed there and it's kind of nothing on the part of TripAdvisor. So we'll see what happens. I'm not sure what the latest rumors are for when the time – the final meeting's at. Ask Liberty directly.

Okay. Thanks a lot.

Okay. Thanks.

Thank you. Our next question comes from Naved Kahn of Cantor Fitzgerald. Your line is now open.

Yes, thanks. Just on the marketing and selling expense, if we X out the – if we normalize for the TV spending, how does the marketing efficiency look like? And then I had a follow-up.

So are you talking about for clarifying the question, 2013 or 2014?

Specifically Q4 of 2013, if we normalize for the TV ad spending, if you did, how does the marketing efficiency look like?

If you were to, as we had said, a significant amount of our TV advertising was spent in the fourth quarter as we were very focused on testing and trail. So we weren't looking for a meaningful uplift in revenue during that testing period. If we were to exclude that I think that would have got to straight to the bottom line and you'd see either our margins closer to previous quarters.

And then I was looking for some color on the – in terms of your return on your advertising if you would not have spent on TV, but more on maybe like China.

So I think if we had not spent on TV mostly that money would have dropped to the bottom line. We already spent in our other channels at a pretty aggressive rate, so certainly we could have used the dollars to spend at a loss in other channels but that would be contrary to the direction that we always had.

Understood. And then second question on the recent settlement in Europe between Google and the antitrust regulators, any commentary around that and the impact on your business?

I'm not particularly happy with the current proposed settlement and we hope that – since there is nothing formal yet, we still have hopes that something more reasonable will be reached.

Thank you. Our next question comes from Peter Stabler of Wells Fargo Securities. Your line is now open.

Thanks for taking the question. A quick one, Steve, can you offer us some color on regional trends? Thanks very much.

Sure. We generally don't go into too much detail on the regions. We have commented that the U.S. and UK were looking stronger. I guess that's against our forecast. And where you see in general around the world sort of macroeconomic challenges, we absolutely see those in both traffic and CPC levels. So, people still love to shop for travel but where there's a high unemployment or a deteriorating economy, the shoppers even though they may click to our partners, it's such a lower CPC to us and so those markets are just harder. And so I'm not sure I'm explaining anything particularly helpful there, but that's all the color that we provide.

No worries. Quick follow-up, if I could. Should we assume that consistent with prior commentary that large global events like World Cup would not provide any sort of meaningful contribution?

No, we tend to look at those large scale events as more likely to be a negative than a positive. So the Summer Olympics, people stay home and watch the games more so than the people who are travelling to the games. I know this is little counterintuitive but that's what we've experienced over the Summer Olympics. I don't think the World Cup will have nearly the effect, it's just not as big an event. Similarly the Winter Olympics would be a much smaller thing. So net-net, those outside of the Summer Olympics, specific holidays, festivals, World Cup tend to be too small for us to bother forecasting again.

Great, helpful. Thanks.

Sure.

Thank you. Our next question comes from Kevin Kopelman of Cowen and Company. Your line is now open.

Hi. Thanks. Just a question on business listings. Can you tell us how you think about that opportunity? When you look at the 775,000 hotels on your platform, what percentage do you think are appropriate for that product? And then can you give us a little more color on the value-based pricing that you rolled out? Thanks.

Sure. So we have out of the 775,000 plus hotels and again separate from all the vacation rentals we have, these are just hotels in these. Last I checked over 300,000 of those were registered owners, so we got a lot of them already in our data base registered interacting with us and kind of that 69,000 subscribers as of the beginning of the year. So we feel we'll never get to all 775,000 of them but as the site grows, as more and more owners want to read the reviews of the property on their site, we have that as the touch point. That touch point yields an engaged owner. If the properties are really terribly rated, we don't call them up and ask for a subscription. And most properties on TripAdvisor are in the good to very good to great range and that makes for an exciting prospect for our sales reps to call. So as we continue to grow traffic, as we continue to grow brand, as our stickers continue to be placed in windows and plaques and hotels all around the globe, all of that drives more and more interest in business listing. So our sales force is now very much worldwide, very much multilingual. We see continued growth there, so we don't feel we're tapping out in any way, shape or form on the opportunity of business listing. And as you can appreciate it, it's a subscription business so revenue keeps recurring. The value-based prices was just – we improved the mechanism by which we price the properties from more based upon whether the city was a popular one to the particular value that we're delivering for a particular property. And the value for the property is a combination of look, what is their ADR,…

Thanks a lot.

Thank you. Our final question comes from Brian Nowak of Susquehanna. Your line is now open.

Thanks. I have two; one for Steve and one for Julie. The first one, Steve, just to go back to Anthony's question, roughly how big is that hotel shopper number now? Just so we can kind of better understand the long runway ahead and how small it is and how much growth potential there is in there going forward? How big are you on an absolute basis just roughly now? And then secondly, Julie, in the past you've given very helpful ranges on the size of mobile and international and meta headwinds. Something in mobile got a little bit worse and meta clearly got better. How big were those headwinds and tailwinds in 4Q? And how should we think about 2014 and kind of what's embedded in the guidance? Thanks so much.

Sure. So I'll start. We generally consider the traffic for a site to be about half and half. Half to hotel shoppers, half looking to either plan the rest of the trip or looking around at what to do or where to eat locally. So I think about half and half and we already shared kind of the 2 billion unique visitor number that Google Analytics reports.

On the bridge side, we didn't give the exact specifics of those ranges but I would say they are consistent with what we have been discussing all year with the international and mobile continuing to be a drag on hotel shopper growth in the 5% to 10% range. We did call out that the mobile drag has intensified and just because of the overall strength in mobile growth we're still monetizing it at a variable rate. This past quarter we had some favorable tailwind with some FX that's about a 1.5 point. And on the meta side when we last spoke in October we were clearly seeing that it was continuing to be a drag on hotel shopper growth as compared to text link [ph] revenue. But we did hit a neutrality in December and that's really calculated when we look at revenue per hotel shopper that's a trough in Q3 and then recovered nicely at the end of the year following into – we're still continuing to see it today. And then the other aspect of it I'd add was some onsite conversion. So I think that sums it up for Q4. Looking at 2014, we still expect to see headwinds from international and mobile we hope with assisted book on mobile rolling out in 2014 that will help improve monetization rates and decreasing the amount of the drag. And meta moving forward especially as we lap the rollout should be a positive.

Thank you. At this time, I'd like to turn the call back to Steve Kaufer for any closing comments.

All right. Well, thank you, everyone, for joining us today. It was a great year for the business and we're headed down on making the product even better in 2014. We look forward to updating everyone on our progress in the next few months. Thanks much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.