Good day and welcome to the Trivago Third Quarter Earnings 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Elie Matta, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everybody. Welcome to Trivago N.V.'s financial results conference call for the third quarter ended September 30, 2018. I am pleased to be joined on the call today by Rolf Schrömgens, Trivago's CEO and Managing Director; and Axel Hefer, our CFO and Managing Director. The following discussion including responses to your questions reflects management's views as of today, October 24, 2018 only. We do not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward-looking, typically preceded by words such as: we expect, we believe, we anticipate or similar statements. Please refer to today's press release and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements. You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in our earnings release, which is posted on the company's IR website at ir.trivago.com. I encourage you to periodically visit our Investor Relations site for important content, including today's earnings release. Finally, unless otherwise stated, all comparisons on this call will be against our results for the comparable period of 2017. With that, let me turn the call over to Rolf. Rolf Schrömgens: Welcome, everybody. Many thanks for joining our Q3 earnings call 2018. Let’s be honest that for last four quarters and the last four quarter earnings call had been quite a challenge. Just to remind you, in Q3 2017, we experienced a drop in our commercialization as our core advertisers adjusted their performance targets. We see significantly less for every euro booking volume that we generated for them. As this directly affected our bottom-line, we were expecting losses for the first half of this year that sums up to…

So the revenue in the third quarter reached €253.7 million, coming from €287.9 million in the third quarter of 2017, which represents a 12% drop year-over-year. In the year-to-date numbers, we are for 2018 at €748 million compared to €853.8 million in 2017 which represents a 12% drop year-over-year. Looking at the adjusted EBITDA, the minus €7.1 million in the third quarter 2017 turned into a €26.6 million in 2018 which represents a 10.5% adjusted EBITDA margin as a percent of total revenue. For the year-to-date, the adjusted EBITDA reached minus €13 million which represents minus 1.7% adjusted EBITDA margin as a percent of total revenue. Coming to the net income, we have reached a net income of €10.1 million in the third quarter 2018, up from €7.7 million loss in the third quarter 2017, which represents this year a 4% net income margin as a percent of total revenue, up from minus 2.7% net income margin as percent of total revenue. Looking at Return on Advertisement Spend, we saw a 25 basis points increase from 111 percentage points in 2017 in the third quarter to 136% in the third quarter in 2018. For the year-to-date, we saw an increase of 2 percentage points, up from a 115% in 2017 to 117% in 2018. Looking at our global KPIs, we saw a decrease in Qualified Referrals of 12%, down from 214.2 million to 189.1 million in the third quarter and a 5% drop year-to-date, down from 587.8 million to 555.6 million. The main drivers of this development were the increased marketing and profitability targets that Rolf mentioned earlier and the impact of the attribution model and the product optimizations. If you look at the RPQRs on a global level, we see the third quarter a slight development at €1.32, whereas…

[Operator Instructions]. And we’ll take our first question from Douglas Anmuth of JP Morgan. Please go ahead.

Thanks for taking the questions. I wanted to ask two. So first, you talked about improving traffic quality and getting back on track as you return to EBITDA profit. But what does the future look like here? Is there a way that you can transform the business to be less dependent on those two large partners or your strategy be largely based on their views of growth going forward? And then second in terms of those large partners you indicated that the ROI targets are higher now than a year ago. But if they continue to ramp those ROI targets through the course of ‘18 meaning have they gotten even higher on a sequential basis as well? Thanks. Rolf Schrömgens: So, on your first question, will we continue to depend on our two largest partners? I think for the foreseeable future, yes, we will. And we talked about that on some of the past calls. We are obviously doing various things to overall decrease our dependency on our largest advertisers. But in the short to mid-term, we will continue to depend on them.

I think generally what you have to conclude when you're looking at the overall trend is that we see a stabilization of commercialization in the last month. So it's true that some of the trends that we’ve spoken about it in the previous calls, I think in Q2, we have seen some of the trends continuing into the first quarter of this year, but we have also seen a quite stable development since then. And that is pretty much also in line with the change of strategy that we have seen from our large advertisers front. So if you're looking at their strategy I think there's always like two different strategies, right. One strategy is maximizing for growth and then you're saying okay, like I reinvest basically everything that I earn into growth. The other strategy is to maximize profitability, but then you maximize the profitability and then you found a stable ground where it's basically not very smart to go even lower with your bids and what we see right now is that we think our advertisers are way closer to that point where they are shifted from completely from a growth strategy to a maximizing profitability strategy and I think the result of that is what we are seeing in the last month. So I think, yes, I think absolutely, it’s right. I mean there is still dependency, I think we're trying to minimize it and see also that our small and medium size advertisers gaining share but it will remain a dependency but we’re still in a way more stable status right now.

Great. Thank you both for the color.

We will now take our next question from Kevin Kopelman of Cowen and Company. Please go ahead.

Hi, great. Thanks so much. Just to start, just a follow-up on your previous comments, Rolf. If you think about your own strategy in the same kind of context between the maximizing growth versus maximizing profitability, where do you feel like you are and what's your thought process on where you want to see your ROAS targets on paid traffic? And then I have a couple other ones thanks. Rolf Schrömgens: Yes, I think we follow the market, of course in this kind of strategy, right. So I think we've seen this from our advertisers and we’re also seeing that it's a super difficult to keep on with the growth strategy against that. So -- and I think that is also a conclusion we came to that we have to focus more on profitability. Looking forward I think what we said is that you want to remain healthy at margin and profitability. So it's not all about profitability maximization. If you want to have a healthy margin and profitability and we think that we can then start growing upon that from there. And I think that healthy margin for us is extremely important because I think it really gives the organization the confidence and I think that is something that was also missing when you're looking at our first two quarters this year. And it gives us also the strategic dependence to take decision and that might have a shorter impact but a long-term positive gain. And we've seen that already, even in this quarter are seeing that and that is what we want to achieve. We want to be strategically dependent. We want to have a healthy margin. And then we also want to start growing upon that.

Great. And so a follow-up on that. Can you talk about what you're seeing so far for the fourth quarter along the lines of revenue and ad spend growth? It looks like the EBITDA forecast will be down Q-over-Q, so if you could walk us through near term comps? And then do you have any initial thoughts on how you're planning for 2019?

Yes, so for the fourth quarter 2018, I mean in general as I said on the guidance, we expect the trend of Q3 to continue. The fourth quarter is slightly different to the third quarter in terms of spend structure. So that is something we're considering when modeling that comment. On 2019, we would not comment on yet but we are confident that what we've done in the third quarter that is the right track to continue on. And we would expect that to have positive impact in the first half of ‘19 as well.

Okay, great. And then just a couple of questions on some of the newer initiatives. Can you give us more color on the vacation rental work that you're doing and how the uptick has been from Trivago shopper so far? Rolf Schrömgens: Let me take that. So I think we've shown you the slide, which shows you that we onboard more and more inventory. And that is basically one work stream, where we continuously put more inventory at a level that we can’t show it to our users. But that not always means that we ramp up the visibility in the same manner. So what we try to do is we try to increase visibility gradually and one effort that we're taking there is that we try to personalize more so that we really can show those users who are rather alternative accommodation bookings, more inventory like this and the others rather less inventory. We think that it’s one strategy how we can make that work for an integrated search. We want to have an integrated search. We don't want to like to show kind of different tabs at different entries into the product like other competitors do that. We really want to -- we see this need as substitutable. We want also to turn alternative accommodation users mainly into hotel users, hotel users into alternative accommodation. And we think we have the right product to do so. Yes, so we see a fully integrated approach. But this integrated approach also means that we have to increase gradually and it will not just be one push, yes.

And just to add to what Rolf said. I mean in the last year where we’ve put significantly more focus on it, we have seen also on our side and through the usage of our users that there is a need for an integrated product and there is demand. So there is an increasing user base that is crossing over from one category to the other quite dynamically. And so that gives us confidence that we are on the right track.

Is that something that’s kind of cookie data can help you with as you see, this person has been searching for vacation rentals on other sites and things like that? Rolf Schrömgens: Yes, but it’s not only cookie data, actually it’s quite interesting like you reveal a lot of your preferences when you are looking for a destination, right. So when you are looking for a specific destination that gives you already quite an insight, the date that you’re looking for, for how many days in advance are you looking, are you searching for a single room, or are you searching for two double rooms. So that is all things that significantly change the probability to be an alternative accommodation user. And I only state the obvious ones, so there are many more criteria. So, yes you get a better picture after you send your search request.

Great, thanks a lot. And I had a lot of questions, just one last one. Can you talk about your efforts to drive engagement and spend from the major hotel chains and any progress you can share there? Thanks. Rolf Schrömgens: We never commented on the share of individual advertisers other than the two large groups. So, we don’t comment on that.

Thank you.

We’ll take our next question from Brian Nowak from Morgan Stanley. Please go ahead.

Hi, it’s Alex Wong on for Brian, thanks for taking the question. Just two, first, how are you thinking about the drivers of revenue growth into 2019, what are the -- maybe Q3 KPIs that you think on point to execute on to reaccelerate revenue growth? And then second just following up on Rolf’s earlier comment around the top-line versus profitability. Maybe perhaps you can expand a bit on if there has been any philosophical change in how Trivago is thinking about top-line versus profitability? And if so, is there any new way which you think about the long-term profitability of the business particularly relative to the 25% margin I think you’ve communicated in the past? Thanks. Rolf Schrömgens: Yes, I think your first question was about what kind of key growth drivers we see for the next year. And I think when you’re going into the different pillars of Trivago, you can go through the different key drivers. And I think what we see is that during the last year we were really able to improve efficiencies of our marketing spend quite significantly and that was a driver of productivity at least in the past and that’s also the reason why we were able to raise profitability so much in the third quarter. So we have seen these efficiencies coming along and we see that we are still in that trajectory that we can improve efficiencies in our advertising spend in the next year. Looking at product, I talked about that during my presentation. I think that we really heavily invested into building our platforms where we can have new growth trajectory and the app is one example where we really like have another chance to iterate way faster than we have been in the past. This was an…

To come to your second question, how to think about the trade-off between top-line development and profitability. I mean let me start with the end of your question, have we changed our view on our long-term profitability target? We have not, and so the 25% plus adjusted EBITDA margin that we talked about at the time of the IPO we still believe is the right number. What we have changed and obviously as you have seen in this quarter is the balance between top-line push and profitability and there we really reacted to the developments in the market and I guess what you're really asking is, okay, how should we think about that trade-off going forward. There has to be the right trade-off of really the overall growth and then the profitability increase. We believe that overall absolute profits should go up and I guess there will be a dynamic reassessment how profitable and how elastic additional spend in top-line development will be from that base that Rolf mentioned earlier and I think that will change the market dynamics over time. But overall, we want to increase our profitability over time in absolute terms. And on the relative terms, I think we will adapt to the market situation as it develops.

We'll now take our next question from Naved Khan of SunTrust. Please go ahead.

Hi, thanks a lot. Two quick ones from me. Maybe, Rolf, you can maybe give us some more color on the changes by your large advertisers. Is both of them making the changes or is it just one of them? And I'm saying that because I see that one of them actually increased share and the other one lost share. And then I had a quick follow-up. Rolf Schrömgens: Yes, I mean the changes that you are speaking about are or were changes mainly in the third quarter of last year and we are still kind of like seeing of course the results right now of that. But when you are speaking about the most recent changes in the share development, yes, I think what is underlying, what you're seeing, the global trends are quite stable on a year-on-year comparison, but what you see is that in total there is a very slight increase I think of Booking.com and slight decrease of Expedia and a slight increase of other advertisers. Underlying that, there are very different developments in the different segments. And what we can say is that Expedia is in general gaining more share in Developed Europe and Booking.com is gaining more share in Americas. And we were able and that is one of the areas where we have been really successful in like ramping up the all other advertisers in the Rest of the World market where we still see also a more fragmented structure of advertisers. When you're looking at the Indian market, huge market, very fragmented structure of advertisers. So, and there we were able to grow the rest of the other advertisers more strongly.

Okay, that's very helpful. And then the follow-up question I had was about your advertising mix. So, as you reduce your own spending on TV and other brand channels as well as in performance channels, how is the mix looking? Is it kind of pretty much even reduction across both performance and brand or are you cutting back more on one versus the other? Rolf Schrömgens: No, we very consistently increased our targets and we are looking at all channels pretty much in the same way and hence looking for pockets where we see inefficient spend that happens in performance marketing as well as in brand marketing, but it's very consistent across the channel.

Great, thank you.

And we'll take our next question from Lloyd Walmsley of Deutsche Bank, please go ahead.

Thanks. Two if I can. First just the guidance at the high end implies I think about €13 million in EBITDA in 4Q, which is traditionally, seasonally the strong quarter. So just wondering if there's anything we should think about there in terms of signaling a plan to drive growth, investing in marketing or anything unusual beyond perhaps conservatism to keep in mind. And then the second question, wondering if you can just give us an update on your performance marketing spend within the Google travel ecosystem and their kind of metasearch product. And then I guess just stepping back, this is also clearly a threat. So do you sense that they are moving any more quickly or aggressively within that business in terms of product development or otherwise any comments you can share there would be great? Thanks.

Okay. So let me start with the first question on the guidance for the fourth quarter. I mean you're right, the fourth quarter is historically our strongest quarter because the advertisement spend and particularly the brand advertisement spend is lowest because we are competing obviously in most of the markets with the Christmas season where the advertisement spend is very expensive. And as a consequence, it's not as economical for us to spend aggressively as in other quarters. So that's a reason why it is historically one of the strongest. On the other hand, in terms of optimizations obviously, that has an impact on how much you can optimize on that basis and I think you need to look at both levers at the same time to basically come up. That's how we looked at it to come up with the guidance that we've given. On the second point performance marketing and there in particular, Google hotel ads, we said in the last couple of quarters, I mean we currently see as an opportunity and why is it an opportunity because we are underrepresented globally in that channel because we only have recently started to engage and test and scale up the test. So the test -- and perhaps it's not right to talk any more about tests, so in the markets where we have tested, we are not fully scaled up or we have reached significant scale already and we are now scaling up still in those markets and also geographically. So we are still benefiting from catch up if you want to say so. Strategically, Google has always been one of our competitors with that product and they have recently made some changes to their product as have we, as Rolf said earlier, and so there we don't see a significant change in the value proposition pace of them versus us recently. So overall, we still see it as an opportunity by increasing our share in the channel to reach our fair market share if you want to say so.

Alright. Thank you, guys.

Next question comes from James Lee of Mizuho Securities. Please go ahead.

Yes, thanks for taking my question. Just want to dig a little bit deeper into your marketing spend. Any way you can give us some clarity, which channel are you cutting the most specifically? And maybe help us understand by geography where you are cutting the most? It seems like based on QR growth, it seems like US more than other geo. I was wondering that's right. And then lastly, maybe can you update on your mix of paid traffic. I remember historically you said brand 50%, SCM 35%. I was wondering if any meaningful change to the mix? Thanks.

Yes, as I said that before, we have raised our targets consistently over like the different channels and that is also resulting basically in a consistent reduction of spend. So there we -- and also it's actually resulting in a stable share per channel. So that said, you spoke about like if you on a geographical level are there differences and you mentioned US and that's right, we reduced more in the US but that is due to several effects. One of them that we generally historically have also more commitments in the Developed Europe market than we have in the US. And on the other side, you also have to keep in mind that we -- or I'm telling you that we had like a push last year which was quite significant in the summer months which was our record spend month last year in the US and that is why we've significantly more reduced in US than in Europe.

And any update on the mix of pay channel, brand versus SCM?

As I said, no, we consistently reduce target, so the mix -- according to that, the mix stays the same.

Okay, and one more follow-up question on your largest advertising partners here. It looks like Booking.com obviously someone asked that question ramping up this quarter. Is that more of the seasonality or is there anything kind of above and beyond that indicating they are ramping up in terms of volume buy, I assume they are still bidding down at this point. And also during the high season, just curious to see Expedia actually pull back and any specific reason why you're seeing them pulling? I assume they are pulling back in the US and just curious what is the dynamic there with that advertiser? Thanks.

Yes, I mean given that the numbers are global numbers, you have to be a bit careful not to read too much into them. I mean there are two things that you need to consider and I guess you don't have enough years to really see that trend. There is clearly a geographic mix effect so the market share of our large advertisers is not the same in the different regions. That's one effect if there is change between the regions. The other effect is that there is also a seasonality effect that is not identical for every advertiser that you need to consider and you can slightly see it in the global numbers and the trend is also not consistent. Yes. As Rolf said earlier, Expedia gained share in Developed Europe, Booking gained share in Americas and the other advertisers gained share in the Rest of the World and the outcome of all these changes is that what you see in the presentation. So, it's not the right conclusion to assume that there is a trend that goes across all the markets and is consistent. There is a lot of mix effect in there.

Okay, great. Thanks.

We'll now take our next question from Mark May of Citi. Please go ahead.

Just a question, getting -- it's kind of getting at the relationship between your marketing spend and Qualified Referral growth. How -- as you continue to rationalize your marketing spend, how should we think about the impact that, that has on QR growth, meaning will we continue to -- will we see a pretty immediate and related negative impact on QR growth or do you feel like you can kind of maintain a decent level of QR growth despite continuing to rationalize your marketing spend?

So, if you talk about levels like the year-over-year effects that you've seen in Q3, there we had a significant reduction in our marketing spend and that I mentioned leading to a negative QR development. So, Rolf said, we are rebalancing the business and from that basis, we will then grow again. I mean this year-over-year effect you will see or we expect you to see until Q2, which is at a degree that has obviously a significant impact on QRs. The second effect that you need to consider and that's what I said for Q4 and then going forward in terms of changes to the trend in Q3, there is also a negative impact on QR growth with the positive impact on the RPQR development for certain product and marketing changes that can be quite significant. And that is also worth considering. So, to see the full picture, it is advisable to look at all three metrics at the same time, QR, RPQR and then ROAS to really have traffic quality, commercialization, marketing efficiency and fundamental growth all together and each one of them impacting more than one of the KPIs.

Okay, thanks. And then in terms of product and maybe policy changes, what if any changes have you guys made or are you planning to make in terms of the product or even some of your advertising policies towards the advertisers that are sort of resulting in an improvement and return on investment by your advertisers? Are there a couple of things that you can talk about?

Yes, I think when you're looking at the new app release, I think you can get a quite good idea of the direction we are heading. So I really invite you to take a look and also compare it to the experience before or our core current mobile web experience. And what we will see is that we're really investing a lot into improving the value depth of our products. So we're really trying to let people take more decisions on Trivago and really let them go deeper into the content, let them really like compare the advertisers more directly than before. So all of these efforts that we do there and I think that is something that you often see happening across the mobile web and desktop in the next month. So you can expect us like with the other platform going into that direction, that will give you a good idea. And I think that is in general something that we think what we have to do. We really want to increase the value depth of our product and let people really compare on Trivago before they go to the advertiser site. And we want to give them like an aligned, a consistent experience throughout the funnel. So we want to make it as easy as possible to go through the funnel to the advertiser which we think at the end is a win-win effect on our side and the advertiser side because you lose or you reduce basically the conflict and the distractions within the funnel. And I think that is something that we are very, very focused with the work on in the next quarter where we have already started and you will see more in the next quarters.

Thanks.

We'll now take our next question from Tom White of D.A. Davidson. Please go ahead.

Great, thanks for taking my question. I'm going to sort of piggyback on the last one. You guys have talked about sort of establishing or trying to establish a healthy margin and then finding ways to grow, beyond kind of finding pockets of, kind of, marketing spend efficiency, on the product innovation side I mean, are there other things beyond kind of these improvements to the app and some of the stuff you just mentioned. Are there new product innovations or new products maybe it's alternative accommodations that maybe can kind of help drive step function improvement in your traffic or conversions. I'm just kind of trying to figure out whether any of those product innovations can kind of be big traffic boosters or conversion rate boosters in a way that could sort of rival your ability to spend money on marketing. And then just on RPQR, it was up in Europe, up slightly in Rest of World, but down in Americas. Can you just kind of slush out the dynamic there so I make sure I understand it? Thanks. Rolf Schrömgens: Okay, so I think we've spoken about the strategic topics and where we are heading already a couple of times in the past and what we did over the last one or two years is that we not only changed the platform that we built our mobile app on, but we basically changed the whole infrastructure of search, to create a search that can work as a learning system, that can continue to learn and I think that continuous learning is something that will differentiate in the future application from each other. That said, that is not coming with an initial strong effect, that is a fact that will show its effect over time, but I think the big step change that from our side is really like the new infrastructure that we have built. At the same time, we have I mean it's maybe more technical, but we have a completely new database structure. We are now running in the cloud. All those changes we did basically like in the last one or two years and we think that this will allow us to develop further way quicker than we did in the past.

So on the RPQR, there are obviously mix effects within all the segments, so it's a bit complicated but I mean let me just point out the main differences. So in Developed Europe, we only saw year-over-year a slight decline in the commercialization whereas in Americas and in Rest of the World, we said there was a decline in commercialization. So the trend in Developed Europe is more favorable than in the other regions. That's one very important factor to understand the difference in RPQR development. The other difference is that there has been a significant improvement in traffic quality through our marketing activities and also product activities in Developed Europe and in the Rest of the World whereas in Americas it has only been a slight improvement and then the last point that is more Americas specific is there has been a shift from lower -- sorry, excuse me, from higher RPQR regions to lower RPQR regions namely North America to South America. One driver of that obviously has been the difference in advertisement reduction given the different levels of commitment and I guess those three factors you need to keep in mind when understanding the different developments in the three regions.

Very helpful, thank you.

We'll take our next question from Heath Terry of Goldman Sachs, please go ahead.

Great, thanks. I did want to follow-up on the comment that you made earlier around the increase that you're expecting in revenue per Qualified Referral because of some of the product changes that you are making. Can you slush that out a little bit more, are these product changes that are driving higher conversion rates or are they product changes that are resulting in higher commissions from your partners. Just any additional detail that you can provide there? And then your commentary in response to one of the last questions around your belief it's better or the intention to go back to more of the comparison and discovery being performed on Trivago. As I recall that was a big part of the issues that booking had around this time last year was that specific flow. Is there something that you worked out that you believe allows you or will allow you to go in that direction or is there some reason that you have to believe that, that's sort of no longer an issue for them. I just want to make sure that I'm understanding that specifically? And then and then finally can you update us on your hotel direct relationships whether or not you've been able to move any further not looking for anything with regard to specific hotels, but just largely as brands are pushing for more direct loyalty program, generally loyalty program driven traffic whether or not those are prices that you're able to show or whether or not you've seen any progress in building those channels? Thanks.

Okay, let me start with your first question. So some more specifics around my comment on the guidance for Q4. So looking at the Q3 trend, there we expect in Q4 to have a more positive RPQR development than in Q3 and a negative impact on the QR that is coming from basically what Rolf was describing before product changes where we increased the interaction with our own website which leads to a lower number of referrals and also Qualified Referrals without decreasing but actually increasing the overall booking value which mathematically reduces QRs and increasing the booking value obviously increases the RPQR and that is something to keep in mind when building the assumptions for Q4. So it's really a product design driven impact on our financial metrics that I was referring to. Rolf Schrömgens: Just to add to that, we also do not expect in our plan, we do not expect again an increase in commercialization. So we expect an increase of traffic quality that we send to our advertisers. So, to your second point, it's actually yes it is true that this is something like improving the flow that we have from Trivago to our advertisers and seeing Trivago and our advertisers more like an integrated system, but that is also one of the ideas behind our LPS score development which also led to the situation last year, but I can tell you that I think the discussions that we have today with our advertisers, especially with our large advertisers on a different level than we have seen them a year ago. So I think we have found we are way more solution-oriented today than we have been one year ago and we think that they are -- and we are way more in a cooperative mode right now I think than we have been in the past. I think from both sides -- like from both of our large advertisers we see a very strong interest to work together with us to really at the end optimize the sum of the things and not only on one or the other side. And I think that is something that we also see for us like a good opportunity for us to develop a product faster forward in the future.

I'll come to your third question on the development of our hotel direct business and there in particularly on loyalty rate visible on the site. I mean overall, we continue to invest significantly into our relationships and into the support of individual hotels direct and also hotel chains direct. So that definitely stays to be one of our focus areas. Having said that, it's not something that changes quarter-over-quarter but it's more a long term project and a long term effort and we believe that it is the right direction and that it is overall successful but quarter-over-quarter there are no significant changes and you wouldn't expect significant changes quarter-over-quarter. On loyalty rates, there is no significant change quarter-over-quarter either. It is an interesting topic and it is not that straightforward to solve both for the hotel chains and for us as a metro partner of theirs, but it is something that we are working on.

We will take our next question from Peter Stabler of Wells Fargo Securities. Please go ahead.

Thank you. This is Rob on the call for Peter. Wondering if you could give just a little bit more about the environment in Europe specifically in the quarter. Booking you talked about some issues around weather and World Cup, I know you said commercialization was down just a bit year-over-year. But wondering if you could talk maybe about commercialization and conversion development quarter-to-quarter there any notable changes there and then what you're seeing into Q4? And then also looking at the internals on the RPQR growth, there were some pretty significant shifts in the quarter in terms of RPQR versus click-out development. Just wondering if you could talk through what was driving the scale of those changes in the quarter? Thank you.

So, on your first question, has there been a significant change quarter-over-quarter? I guess, year-over-year, quarter-over-quarter, there has. I mean we said in Q2 for the overall business that there was a double-digit impact on commercialization but I guess that is more Trivago-specific than for the overall market because we benefited from relevance assessment and particularly in Q1 and Q2 '17. So in our quarter-over-quarter trend, there is a positive development in Developed Europe. On the World Cup and has there are been a significant impact of the World Cup on the seasonality, on the overall volume of the market? Given the changes that we've started to implement in the second half of the second quarter, for us, that is actually very difficult to see because the main trends that we are obviously seeing is the impact of our spend optimization on our volume. So that's difficult to comment on from our perspective.

Thank you and anything on the RPR and the click-out rate, the scale of the changes there in the quarter? Thank you.

On the RPR and the click-out rate, I guess, I mean it's a difficult way to look at the business and that's why we focus all our discussion on the RPQR because the click-out rate is heavily influenced by changes in the product. The QRs are more stable given that they are unique click-outs and that's why I'm not sure that it is really that meaningful. You can have through small product changes, you can have a very significant impact on the RPR and the click-out rates and the QR is more stable. Having said that, some of the changes obviously have an impact on the QRs as well and that's what we are talking about earlier, but we would advise everybody to really focus on the QRs because they are much more stable as a metric and as a consequence, much more meaningful than just the referrals.

Got it, thank you.

[Operator Instructions]. Now we'll take the last question from Shyam Patil of Susquehanna. Please go ahead.

Hi, it's Brendan on for Shyam. Just kind of going back to the RPQR discussion, just in terms of like the traffic quality improvements sort of driving improving trends in Developed Europe. Like how should we kind of think about that beginning to show up in other geographies and what are some of the puts and takes there? And then just on your growth versus profit commentary, I guess where do you guys feel you are in terms of like you referred to like reestablishing the profit base to return to growth and sort of how should we think about the timeline for that?

So, on the RPQR trend in Europe versus the other regions, I mean it's not that that the development in Europe is leading all other regions and you would be able to convert the same trend one-to-one to the other regions. The trends are different and we have at the same time implemented changes to the product. There are certain pockets where there is a bit of a time lag and particularly where we have on the branded advertising side commitments which tend to be the case in certain parts of Southern Americas and Europe and a very few other countries. So there is some time lag there but it is not that Europe has been the first where we implemented certain things and you could expect to see exactly the same development in the other region. So the development in the region is slightly different for the reasons that we discussed earlier. On the growth versus the profitability, we believe what we are currently doing is the right thing to find a solid base and then from that base to start to show solid growth again. So for now, we feel good with what we've done in the third quarter and I guess once we have lapped that recalibration, we expect to see growth again. Rolf Schrömgens: Yes, I think from like our like let's say mid-term goals, you would say, okay, we think right now, actually, we feel very comfortable, like we have a comfortable base or a solid base of profitability. And -- but it will, of course, take a year maybe to lap those effects. But it's not that we are right now in the middle of the process and you can expect the margins even growing now in the next quarter. So I think that is now our new basis where we think that we can start growing on then as soon as we lap the effects.

Operator, so if we have no more questions, I think we can end the call.

Yes, we have no further questions at this time.

Okay. So we would just like to have some closing remarks from Rolf. Rolf Schrömgens: Thank you. So we are actually very happy that after some challenging quarters, we are now able to show again significant improvement compared to the previous year. The new healthy level of profitability as I said helps us now to gain confidence in our business model and our organization and we can go back to focus on producing value for our users and our advertisers. I want to repeat that our clear goal is to rebalance the business on a higher profitability level and start growing again after that. Thanks a lot everybody for joining the call. See you next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.