Good day and thank you for standing by. Welcome to the Tripadvisor Second 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, Vice President of Investor Relations. Angela, please go ahead.

Thank you, Felicia. Good morning, and welcome to Tripadvisor’s second quarter 2024 financial results call. Joining me today are Matt Goldberg, President and CEO; and Mike Noonan, CFO. Earlier this afternoon after 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, August 06, 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 afternoon, everyone. Our second quarter consolidated results were in line with our expectations. With revenue of $497 million, reflecting year-over-year growth of 1%, and adjusted EBITDA growth of 7% to $97 million, or 20% of revenue. Our results reflect the diversification of our portfolio mix, its different growth profiles and strategies, and the increasing contribution to profit mix we're seeing from Viator and TheFork. Mike will cover details of financial performance in his section, but first I'll cover our operational progress as we execute our segment strategies. As a reminder, at Brand Tripadvisor, our strategy focuses on driving engagement and delivering world-class guidance products to fuel diverse monetization paths. At Viator, we're reinforcing our leadership position and experiences by investing in our brand, product, and repeat bookings to drive LTV and improved unit economics. Finally, at TheFork, we're focused on driving revenue growth with margin improvement by increasing the value we deliver to diners and restaurants as the leader in the European dining market. Let's start with Brand Tripadvisor. In Q2, we delivered revenue of $250 million, a decline of 10%, and adjusted EBITDA of $84 million or 34% of revenue. Our financial performance continues to reflect the transition from our historical reliance on legacy offerings, such as hotel meta, which has experienced ongoing pressure over time, to a more diverse and sustainable model. This challenge is well-known, and the strategy we launched last year addresses it head on. When we offer a more compelling product that better meets travelers' needs across their end-to-end journey, from the first moment of planning through the end of the trip itself, we drive deeper engagement. We get more users coming to us through direct channels, like our app. We get them to sign up as members and come back…

Thanks, Matt, and good afternoon, everyone. I'll start by reviewing the quarter and then provide our outlook for the third quarter and the remainder of the year. All growth rates are relative to the comparable period in 2023, unless noted otherwise. Second quarter revenue was $497 million, reflecting growth of 1%, which was in line with the expectations for the quarter. Adjusted EBITDA was $97 million, or 20% of revenue, and 200 basis points higher than last year. Adjusted EBITDA was higher than expectations across each of the segments. Turning to segment performance for the second quarter, Brand Tripadvisor delivered revenue of $250 million, which was a decline of 10%. Brand Tripadvisor revenue was slightly lower than expectations, primarily due to the performance of hotel meta and experiences in the quarter. Brand hotel revenue was $150 million or declined of 14%. Hotel meta performance reflects the weaker demand trends we observed in April, which did not improve in May or June. Lower paid click volume was driven by weaker demand as well as increased competition in these channels. We continue to manage our paid channels for appropriate returns as reflected by slightly higher year-over-year contribution margins. Lower free click volume was due in part to the impact of the algorithm update referenced on our last call. Pricing continued to be up year-over-year, but at a lower rate than prior quarters. From a geographic perspective, hotel meta revenue in the US stepped back meaningfully from Q1 levels while EMEA and APAC were more in line with Q1 levels. Finally, we experienced modest declines in in our hotel B2B offering, a trend we expected as we continue to transition our go-to-market model to self-service. Media and advertising revenue declined 2% to $41 million. Growth in off platform and programmatic revenue was offset…

[Operator Instructions] The first question comes from the line of Ben Miller of Goldman Sachs.

Thanks for taking the question. I guess just given the importance of driving more app-based and logged in members, I wanted to touch on just your own marketing efforts and any color you can share on how you're optimizing your marketing efforts around targeting those users that have a high likelihood of converting to being a logged in member as opposed to casting a wide kind of top-of-funnel net there. Thanks.

Yes. Hey, Ben. It's Mike. I'll start, and Matt can chime in. So it's a great question. It's essential to really the work we're doing around at Brand Tripadvisor. As we said, so much of this has been product-led transformation, and we're really excited about what's developing in the app, both of the hotels category, but obviously with experiences in combination with our trip planning tool, which we've been investing heavily behind. I think there's a lot of marketing strategies which we do employ. A lot of it is around when we have a massive upper, we have a massive top of the funnel with our, at Brand Tripadvisor, when we see users that are activating across the surfaces, there are a lot of different things we can do to stimulate or inspire or incentivize certain behaviors to download the app and get them to start interacting in the app. So that's one strategy we certainly will be employing. And then there's a lot of just, you think about just different marketing campaigns around, how you're targeting users, whether it be an app downloads, whether you are incentivizing certain people to a behavior, again, with an incentive that we will be looking at and exploring and have been doing for some time.

Yes, Ben, I just want to add, it's Matt. Our marketing at Tripadvisor has traditionally been same session, it's been about basically bringing people in and taking advantage of the flyby traffic. We can shift from same session to LTV-based bidding. We've got data now that we can use to target. We've been very lower funnel, and as we move mid to upper funnel, we can get a lot of the learnings that we've had in what we've done at Viator and TheFork frankly, about how we can leverage that data to drive people into membership and the app where they engage, and we can let the product do the work. And I think that the early movement in the metrics that we shared gives us a lot of confidence that we've got a good plan ahead for that.

The next question comes from the line of Naved Khan of B. Riley Securities.

Yes, hi. Thanks a lot. Two questions from me. Maybe just on the increase in the app users, that's great to see, but in terms of the P&L effect, and when can this be more meaningful in terms of maybe stabilizing the core business or maybe even returning it to growth? How should we be thinking about that transition? Is it like a 12-month window, 12 months away, or something that's further out? That's one, and then on the share buyback, you still have like authorization of $200 million remaining. Given where the stock is, how should we would be thinking about the propensity to spend on buybacks versus the other opportunities. Thanks.

Hey, Naved, thanks for the questions. Yes, I'll start with the buyback. Yes, so we still have a good amount left in that. We have said consistently, our approach has been very programmatic in that. I would say this quarter, we are very much focused on setting our capital structure as well and understanding true liquidity with the refinance of the high yield. So I think we will always evaluate this and find the best opportunities, whether it be programmatic or more opportunistic. And certainly we will engage in those discussions going forward as we think about where the stock may or may be and versus our liquidity profile.

Yes, and the way to think about what we're seeing in the app, I've said in the past, we are strategy is very much about moving away from the big number at the very top of the funnel which includes a lot of flyby, in and out traffic, frankly a very low percentage of which clicks through and we monetize. And to think about that sort of the traffic that is actually coming in and wants to use our tools is showing us that they're willing to plan with us, leverage our content, getting the data that comes along with that, moving that into membership, really enhancing the value of the membership and getting more people to use the app. And we're super excited that the early returns on that look very good. Now that direct traffic, that engaged traffic, membership and app, it's a subset of our business today. And we see it as an opportunity to scale it and we think that what we've seen is that we're responding to what travelers really want from us and the engagement metrics are translating through the monetization that we described, the many multiples more that we can do. So while it's small, it's something we can scale and when we get marketing and product working together, I think that you will see it become a more meaningful percentage of our overall financial performance.

Okay, maybe a quick clarification, if I may, if I would think about Viator margin for this year, are you still aiming to have some improvement year-over-year, how should we think about that?

Oh, yes, Naved, it’s Mike, definitely. If I wasn't clear about that, yes, we are expecting meaningful margin improvement in Viator for sure.

The next question comes from the line of Stephen Ju of UBS.

Hey, good afternoon, guys. This is Jeremy on for Stephen. So you called out improvements in Viator cancellation rates from optimization. How much more room do you think there is across Viator and the business for optimization, and can you maybe walk through some of the areas you're excited about? And then my second question is, on hotel booking and rewards, are you expecting any sort of P&L impact, and would you potentially roll this out to experiences as well? Thank you.

Yes, thanks, Jeremy. Look, on Viator, there's a lot of changes that happen every quarter to optimize the funnel at Viator. We have changes that will bring down cancellation rates because we've done a better job of serving the consumer with what they expect and gotten them to the right product and given them a great experience, and then they come back and we see improvements. There's a lot that we're doing with personalization to personalize the product sort. We're obviously always thinking about optimizing the app. One of the things we're excited about is how we're thinking about post-booking logistics and really leveraging consumer data to deliver a more personalized and effortless booking experience. Obviously, we're leaning into loyalty and a rewards program that will really drive repeat behavior. We're focused on our suppliers and making sure that they have the best experience so we have the best supply and I'm pleased to say that supply continues to grow and we feel really good about the quality work we're doing there as well. And then of course we are leveraging AI to think about the sort, to think about how we augment our customer service and other parts. So we're always looking at opportunities to improve the metrics on that funnel and I think you see it in the way that it delivers. The second part of the question.

Yes, on the rewards. Yes, I'll take that Jeremy. Listen, I think rewards and incentives are a powerful tool for us and really, you've seen that across the travel ecosystem. We have built our products with that in mind and you can say that at both Brand Tripadvisor, what we're doing in the app, you can say that certainly at Viator and even TheFork. So we think about this across all of our brands. Your question directly of impact on the P&L, I would say we've been very disciplined on our performance marketing spend and ROAS and ROIs. I view this really as another way of thinking about customer acquisition and acquiring stickiness in the customer and so we have to balance that with other investments around acquisition and you would expect us to do that. So it's an area that we are excited about. It's a tool that really can drive engagement but we'll think about that holistically as we think about overall marketing and investments.

And Jeremy, just to be clear, you asked if we would roll it out on experiences. It already is rolled out on experiences. You can book experiences on our app. We're adding hotels and there's other category opportunities in the future. So we think this ability to come in and integrate trip planning with booking in the app for logged in members is a real meaningful opportunity for us. We're excited to go after it.

The next question comes from the line of Wei Fang of Mizuho Securities.

Thank you for taking my question. Can you just give us a quick update on the Google kind of search policy changes impact? I remember last quarter you guys caught out on the meta business, you already kind of retrieved most of the impact, right. And then overcome that, and I'm not sure, but the experiment was just curious if there was anything you can cut out for the experience side. In a second point, on TheFork, do you have currently a target, like a restaurant count, right, coverage for your end? Thank you.

Yes, I'll take the first part. Yes, on the Google algo, what we caught out last quarter, we did say there was an algorithm change, it was very far-reaching and took a long time, right. So it was rather disruptive in April into May, and partly it was an impact on our free traffic, impacting our financials for the quarter. That algo update, our teams do a really good job of reacting to that, and as we said, in the hotel category, had clawed back most of those rankings as we came through the quarter, which is true, right. So I think it still had an impact in the quarter. I think much of the other financial impact of the quarter wasn't directly related to that. That was more reflective of that in combination with some of the demand trends we saw in both free and paid channels. So our financial performance in hotel meta was not all related to that algo change, to be very clear.

And I would just remind you, this is exactly why we put the strategy in place that we put in, and then we're focused on these direct relationships with members in our app and translating that engagement to monetization. And I think the combination of our teams responding really well and our strategy is going to serve us well. The second part of your question, we didn't hear. So if you had the second part, can you repeat it?

I was just curious, are you targeting additional restaurants consign now for the year end and what would then be versus the current number year?

Yes, so we're really pleased with the progress we're making at TheFork. Thank you for asking about it. And we believe the business is on track to deliver growth and profitability this year, as we said we would aim to do in our strategy. And we're benefiting from a lot of different things that are driving unit economics and leverage. And part of that includes our enhanced sales productivity with restaurants, as you describe. So we've seen both stability and active restaurants and we're growing to count. But more importantly, we're seeing better restaurant ARPU at lower CAC. And so you combine that with the marketing efficiency on the B2C side and the product improvements we're making in the app to drive conversion rates and improve B2B revenue. And of course, the partnerships that I mentioned, you've got a recipe there where we're seeing profitability improving with a healthy growth rate and we're going to deliver that margin for the full year as we described.

This concludes the question and answer session. I would now like to hand the call back over to Matt Goldberg. Matt, please go ahead.

Thanks again everyone for joining us today. We're looking forward to executing in the second half of 2024 and continuing to drive our initiatives forward. We'll look forward to speaking with you all soon. Have a good one.

This does conclude today's conference call. You may now disconnect.