Good day, and thank you for standing by. Welcome to the Tripadvisor First Quarter 2024 Conference Call. [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.

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 measures 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 8, 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.

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 a 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 but 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 path. 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…

Thanks, Matt, and good morning, everyone. I will start with a recap of the quarter, and then will 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…

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 Instructions] The first question comes from the line of Naved Khan of B. Riley Securities.

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 figure out in your language about balancing growth and profitability, how much of the slowdown is really 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?

Great. Naved, it's Mike. I'll take the first one. Yes, so the 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, we continue to see a very good growth in our core channels SEM, Matt, mentioned earlier that our app growth is very, 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.

Yes. And 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 3 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 3 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 Instructions] The next question comes from the line of Ron Josey of Citi.

This is Robert on for Ron. 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?

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 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.

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.

Got it. That's helpful. And then second one, just on supply trends. Can you maybe elaborate on recent supply trends across? Are there any reasons in particular that you would call out versus unexpected growth? Any color there would be really helpful.

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

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

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 digital world, and 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 4 and 5 stars on average, we think that we actually are the highest quality supply available anywhere on the web. And so you combine those 2 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 complement the teams for the work they do every day to make sure that we are leading the pack.

The next question comes from the line of Niall Mitchelson from Bernstein.

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 [ Trips' stake ] book, maybe a special dividend? Is there something we can do that and sort of help collapse that structure?

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 to say at this point. And certainly, I don't want to speculate on what could or could it be on that.

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.

[Operator Instructions] The next question comes from the line of Doug Anmuth of JPMorgan.

This is Dae on for Doug. I have 2. First one, appreciate the color you guys gave on Viator revenue and understand the Easter dynamic 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 especially into back half?

Yes. Dae, it's Mike. We don't guide to GBV. Well, listen, GBV is going to be obviously a more 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 cancel rates and things like that. So I think that's just the way we're thinking about it.

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 to 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.

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

Yes. So I'll take the first part around what's weighing on click volume 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 the clicks and the free channels. When you think about the paid channels over time, you've had 1 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 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.

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 nonmembers. 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, and 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.

[Operator Instructions] The next question comes from the line of Jed Kelly of Oppenheimer.

Great. Just 2, 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 to Europe?

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 a 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 some of the things we're 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.

Yes. On question 2, 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 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.

[Operator Instructions] The next question comes from the line of Vince Ciepiel from Cleveland Research Company.

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?

Hello Vince. Yes, we have basically 2 programs at both brands. The $35 million that we cited last year was at Brand Tripadvisor about $10 million at TheFork. 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, 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 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 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.

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.

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.

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 compared analysis just compare year-over-year, I think just got to 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 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.

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 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, 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.

[Operator Instructions] The next question comes from the line of Tom White of D.A. Davidson & Co.

Just wanted to follow up on the travel 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?

Yes. Thanks, Tom. It's Mike. I'll take it. On the changes. So listen, there's been a lot that's been happening on this. And they just 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 performance across the other channels. But do note, yes, there are some headwinds in the SEO.

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 1/3 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.

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.

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.

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