Trip page post 3

Author: Buynholdisdead Date: 11/30/2014


TripAdvisor (Trip)
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I would like to thank Seekingalpa.com for the transcripts

TripAdvisor is an online travel company, empowering users to plan and have the perfect trip. TripAdvisor’s travel research platform aggregates reviews and opinions of members about destinations, accommodations, restaurants and activities throughout the world through their flagship TripAdvisor brand.

Reported November 4th, 2014 04:30PM
Today the price is $73.80: The PE ratio is 51.25 The P/S is 8.98. The stock went down $11.84 the day after the report.

Fourth Quarter and Full Year 2011 Financial Results
February 8,2012 earnings highlights:
** Revenue was $137,798 million
** TTM Revenue was $637,063 million or $4.72 per share
** Quarterly Related-party revenue from Expedia = $37.5 million
** Earnings were $0.16
** TTM earnings were $1.32
**Gross Profits were $135 million
** YoY Gross Profits were $626 million
** Quarterly Gross margins 98%: Operating margins 24%
**YOY Gross margins 98% : Operating margins 42%
** Diluted share count 134,865,250
** Cash $183.5 million: debt $46.7 million
**Free Cash Flow Quarterly $20.9 million
** YoY Free Cash Flow $196.6 million

First Quarter 2012 Financial Results
May 1st, 2012 earnings highlights:
** Revenue was $183.7 million
** TTM Revenue
** Quarterly Related-party revenue from Expedia = $51.6 million
** Earnings were $0.35
** TTM earnings were
**Gross Profits were $180.9 million
** YoY Gross Profits
** Quarterly Gross margins 99%: Operating margins 40%
**YOY Gross margins: Operating margins
** Diluted share count 136,157,675
** Cash $208.6 million: debt $44.6 million
**Free Cash Flow Quarterly $22.4 million
** YoY Free Cash Flow
**Trading range Low $30.12 High $37.89
**P/E ratio range
**P/S range

Second Quarter 2012 Financial Results
July 24th, 2012 earnings highlights:
** Revenue was $197 million
** TTM Revenue
** Quarterly Related-party revenue from Expedia = $55.7 million
** Earnings were $0.37
** TTM earnings were
**Gross Profits were $194.2 million
** YoY Gross Profits
** Quarterly Gross margins 99%: Operating margins 42%
**YOY Gross margins: Operating margins
** Diluted share count 141,736,894
** Cash $478 million: debt $54.4 million
**Free Cash Flow Quarterly $55.8 million
** YoY Free Cash Flow
**Trading range Low $39.40 High $47.81
**P/E ratio range
**P/S range

Third Quarter 2012 Financial Results
November 1st, 2012 earnings highlights:
** Revenue was $212.7 million
** TTM Revenue
** Quarterly Related-party revenue from Expedia = $56.9 million
** Earnings were $0.41
** TTM earnings were
**Gross Profits were $209.8 million
** YoY Gross Profits
** Quarterly Gross margins 99%: Operating margins 43%
**YOY Gross margins: Operating margins
** Diluted share count 143,656,985
** Cash $548.4 million: debt $64.5 million
**Free Cash Flow Quarterly $69.1 million
** YoY Free Cash Flow
**Trading range Low $28.63 High $39.00
**P/E ratio range
**P/S range

Fourth Quarter 2012 Financial Results
February 13, 2013 earnings highlights:
** Revenue was $169.4 million up 23% from 137.8 million
** TTM Revenue $ 763 million up 20% from $637.1 million
** Quarterly Related-party revenue from Expedia = $39.5 million
** Earnings were $0.23 up 44% from $.16
** TTM earnings were $1.37 up 4% from $1.32
**Gross Profits were $166 million up 23% from 135 million
** YoY Gross Profits were $ 750.9 million up 20% from $626.2 million
** Quarterly Gross margins 98%: Operating margins 28%
**YOY Gross margins: 98% Operating margins 39%
** Diluted share count 143,813,851
** Cash $486.5 million: debt $72.1 million
**Free Cash Flow Quarterly $62.4 million up 197% from $21 million
** YoY Free Cash Flow 209.8 million up 7% from $196.6 million
**Trading range Low $32.50 High $49.35
**P/E ratio range 23.37 to 36.02
**P/S range 6.13 to 9.30

First Quarter 2013 Financial Results
May 7th, 2013 earnings highlights:
** Revenue was $229.9 million up 36% from 169.4 million
** TTM Revenue $ 809.2 million up 23% from $657.3 million
** Quarterly Related-party revenue from Expedia = $60,511 million
** Earnings were $0.43 up 23% from $.35
** TTM earnings were $1.45 up 10% from $1.32
**Gross Profits were $226.3 million up 25% from 181 million
** YoY Gross Profits were $ 796.2 million up 21% from $660.2 million
** Quarterly Gross margins 98%: Operating margins 38%
**YOY Gross margins: 98% Operating margins 38%
** Diluted share count 144,655,240
** Cash $401.1 million: debt $61.3 million
**Free Cash Flow Quarterly $34.4 million up 54% from $22.4 million
** YoY Free Cash Flow 221.8 million up 30% from $170.7 million
**Trading range Low $42.04 High $56.80
**P/E ratio range 28.99 to 39.17
**P/S range 7.52 to 10.15

Second Quarter 2013 Financial Results
July 24th, 2013 earnings highlights:
** Revenue was $246.9 million up 25% from 197 million
** TTM Revenue $ 859.1 million up 25% from $685.1 million
** Quarterly Related-party revenue from Expedia = $54,322 million
** Earnings were $0.46 up 24% from $.37
** TTM earnings were $1.54 up 20% from $1.28
**Gross Profits were $242.7 million up 25% from 194.2 million
** YoY Gross Profits were $ 844.7 million up 23% from $687.9 million
** Quarterly Gross margins 98%: Operating margins 38%
**YOY Gross margins: 98% Operating margins 37%
** Diluted share count 145,664,210
** Cash $396.1 million: debt $64.6 million
**Free Cash Flow Quarterly $75.3 million up 35% from $55.8 million
** YoY Free Cash Flow 241.3 million up 41% from $171.4 million
**Trading range Low $51.72 High $65.41
**P/E ratio range 33.58 to 42.47
**P/S range 8.77 to 11.09

Third Quarter 2013 Financial Results
October 23rd, 2013 earnings highlights:
** Revenue was $255.1 million up 20% from 212.7 million
** TTM Revenue $ 901.5 million up 26% from $717 million
** Quarterly Related-party revenue from Expedia = $56.2 million
** Earnings were $0.38 down 7% from $.41
** TTM earnings were $1.51 up 18% from $1.28
**Gross Profits were $249.9 million up 19% from 209.8 million
** YoY Gross Profits were $ 884.8 million up 26% from $703.5 million
** Quarterly Gross margins 98%: Operating margins 33%
**YOY Gross margins: 98% Operating margins 35%
** Diluted share count 145,454,000
** Cash $432.4 million: debt $66.2 million
**Free Cash Flow Quarterly $129.3 million up 87% from $69.1 million
** YoY Free Cash Flow 301.4 million up 80% from $168.2 million
**Trading range Low $68.11 High $82.19
**P/E ratio range 45.11 to 54.43
**P/S range 10.99 to 13.26

Fourth Quarter 2013 Financial Results
February 11th, 2014 earnings highlights:
** Revenue was $212.7 million up 26% from 169.4 million
** TTM Revenue $ 944.7 million up 24% from $763.1 million
** Quarterly Related-party revenue from Expedia = $46.4 million up from 39.5 million (Analyst thought this would drop when they were spun off from Expedia.)
**Gross Profits were $208.1 million up 25% from 165.9 million
** YoY Gross Profits were $ 926.9 million up 23% from $750.9 million
** Quarterly Gross margins 98%: Operating margins 13%
**YOY Gross margins: 98% Operating margins 31%
** Net Income $20.3 million down 40% from $33.7 million
** EPS were $0.14 down 39% from $.23
** TTM EPS were $1.41 up 3% from $1.37
** Diluted share count 145,280,000 up from 143,814,000
** Cash $482.4 million: debt $68.5 million
**Free Cash Flow Quarterly $55.1 million down 12% from $62.4 million
** YoY Free Cash Flow 294.1 million up 40% from $209.8 million
**Trading range Low $72.57 High $93.13
**P/E ratio range 51.5 to 66.0
**P/S range 11.16 to 14.32

First Quarter 2014 Financial Results
May 6th, 2014 earnings highlights:
** Revenue was $281 million up 22% from 230 million
**Sequentially Revenue was up 32%
** TTM Revenue $996 million up 21% from $824 million
**Gross Profits were $273 million up 21% from 226 million
** YoY Gross Profits were $ 974 million up 22% from $796 million
** Quarterly Gross margins 97%: Operating margins 34%
**YOY Gross margins: 98%
** Net Income $68 million up 10% from $62 million
** EPS were $.47 up 9% from $.43
** TTM EPS were $1.45 flat from $1.45
** Diluted share count 146 million up from 145 million
** Cash $461 million down QoQ from 482.4 million
**Debt $71 million up from $68.5 million
**Stock based compensation was Flat at 14 million YoY
**Free Cash Flow Quarterly was $89 million up 154% from $35 million
**Trading range Low $75.13 to High $109.79
**P/E ratio range 51.81 to 75.72
**P/S range 11…01 to 16.09

Second Quarter 2014 Financial Results
July 23rd, 2014 earnings highlights:
** Revenue was $323 million up 31% from $247 million
**Sequentially Revenue was up 15% from $281 million
** TTM Revenue $1.07 billion up 25% from $859 million
**Gross Profits were $314 million up 29% from $243 million
** Quarterly Gross margins 97%: Operating margins 31%
** Net Income $68 million flat from $67 million
** EPS were $.47 flat from $.46
** TTM EPS were $1.46 down 5% from $1.53
** Diluted share count 146 million flat from 146 million
** Cash $638 million up QoQ from $482 million
**Debt $94 million up from $72 million
**Stock based compensation was up from 10 million to 15 million YoY
**Free Cash Flow Quarterly was $136 million up 79% from $76 million
**Trading range Low $80.16 to High $111.24
**P/E ratio range 54.90 to 76.19
**P/S range 10.94 to 15.19

Third Quarter 2014 Financial Results
November 4th, 2014 earnings highlights:
** Revenue was $354 million up 39% from $255 million
**Sequentially Revenue was up 10% from $323 million
** TTM Revenue $1.2 billion up 33% from $901 million
**Gross Profits were $343 million up 38% from $249 million
** Quarterly Gross margins 97%: Operating margins 24%
** Net Income $54 million down 4% from $56 million
** EPS were $.37 down from $.38
** TTM EPS were $1.44 down 4% from $1.50
** Diluted share count 146 million flat from 146 million
** Cash $576 million down QoQ from $638 million
**Debt $76 million down from $94 million
**Stock based compensation was up from 11 million to 17 million YoY. 5% of Revenue.
**Free Cash Flow Quarterly was $45 million down from $129 million
**Trading range Low $71.05 to High $102.86
**P/E ratio range 49.34 to 71.43
**P/S range 8.64 to 12.51

Income Statement
Revenue was up YoY and sequentially also. Gross profits were up by 38% and their Gross Margins are impressive at 97%. But their operating margins stumbled this quarter with margins down to 24%. Net Income also decreased this quarter with EPS essentially flat. They are growing revenue very nicely but most of it is not falling to the bottom line. We can see that their Cost of Revenue is not causing them to miss on the bottom line because Gross Margins are still staying high at 97%. But their operating margins have dropped significantly to 24%. The main drag on this is their Selling and Marketing. It has gone up YoY from 97 million to 159 million. That has gone from 39% of revenue up to 45% of revenue now. A big part of this was search engine marketing (SEM). They also had a big increase in offline advertising costs which were related to their new television campaign that was launched in May 2014. They spent 19 million on this campaign for the quarter. Personnel and overhead costs increased 11 million. This was due to an increase in headcount to support business growth and their recent acquisitions. So while their revenue has increased their net income has come down.

Balance Sheet
While cash has come down QoQ it is up from a year ago. But I am tracking cash quarter to quarter. Cash will fluctuate with this company because they will be acquiring companies from time to time. They like to pay for their acquisitions with cash and stock. They still have $576 million in cash on their Balance sheet and their debt has come down. I consider their Balance sheet to be very strong but it’s also a wash with Cash down along with debt.

Cash flow statement
Their cash flow is down YoY. A lot of this can be attributed to their drop in net income. Also you have to realize they have been on an acquisition tear for this year. They have acquired four companies this year with the last one being Viator. The cash flow statement is in decline
Trip did not repurchase any shares of common stock this quarter and they still have $105 million remaining to repurchase shares.

Liberty Interactive Corporation
Liberty Interactive spun off their shares of Trip into a new company called Liberty TripAdvisor Holdings Inc (LTRIP). As a result LTRIP became a separately public traded company.

Stats
**Click Based advertising up 31% YOY. Click based advertising is 70% of total revenue in the second Quarter and was 74% of revenue in third Quarter of 2013. This is down from 73% of click based advertising in the 2nd quarter of 2014.
**Display-based advertising up 13% YOY. Display based advertising represented 10% of revenue in the third quarter of 2014 compared to 12% in the third quarter of 2013.
** Subscription, transaction and other increased 106% YOY. This represented 20% of total revenue compared to 14% in the third quarter of 2013.
**Revenue in North America grew 35% YOY representing 50% of total revenue.
**Revenue from Europe, Middle East and Africa grew 43% YOY and represented 34% of total revenue.
**Revenue from Asia-Pacific region grew 30% YOY and represented 12% of total revenue.
**Revenue from Latin America grew 78% and represented 5% of revenue.
**International revenue was 53% of total revenue.

**TripAdvisor has nearly 200 million reviews and opinions ( up 30 million from last quarter) on more than 4.4 million places to stay, places to eat and things to do-(up 200,000 from last quarter) including more than 890,000 hotels and accommodations(up 40,000) and approximately 650,000 vacation rentals, (up 10,000 from last quarter) 2.4 million restaurants(up 100,000 from last quarter) and 480,000 attractions (up 30,000 from last quarter) in 145,000 destinations (up 3,000 from last quarter).
**TripAdvisor launched localized versions of its website in Austria, Vietnam, Israel, Finland, Hungary in Q2 and Czech Republic, bringing its total points of sale to 43. TripAdvisor also debuted its new “Don’t just Visit” TV ad campaign in the United States, Australia, and France.
**TripAdvisor Mobile Audience is now 50% of its customers. They have 315 million monthly unique visitors during the quarter while 157.5 million of them where on mobile this is up from 140 million last quarter. Trip launched localized versions of its website in Czech Republic, Slovakia, and Serbia in Q3.
**TripAdvisor reached more than 150 million mobile app downloads, up greater than 120% yoy.
** TripAdvisor has six instant booking partners live and another 13 signed and pending implementation, Trip also launched an alpha version of Instant Booking on its TripConnect platform, which enables independent hoteliers to receive direct bookings through Trip.
**TripAdvisor acquired Viator, the leading resource for researching and booking destination acitvities around the world.
**TripAdvisor announced the launch of Instant Reservation feature for restaurants, which lets users select a restaurant and complete a reservation on TripAdvisor. Instant Reservation is currently available on over 13,000 restaurants within the La Fourchette network spanning France , Spain, Switzerland, and Belgium.
**TripAdvisor acquired this year La Fourchette, Vacation Home Rentals, Tripbod, and Viator.

Conclusion:
Trip click based revenue is down about 3% and they expect this to continue into Q4. They wanted to make it clear that they do not manage the business on a margin basis but that they are measuring success over 2 to 5 year increments. They are acquiring companies at a faster pace and I think this has to do with the race to be the top company to come for all your vacation needs. There is a lot of competition in this space but Trip has a huge network effect that keeps growing. One of the analysts pointed out that Trip seems to be upbeat about their ad spend on tv but do not seem to have much to show for it. The CFO Julie Bradley said that they were only off about 2% on the Selling and Marketing from a year ago. I really do not think this was a good answer because you would have thought with the ad spend they would have made more Revenue for their dollars. Maybe this will come in next quarter but management was not very optimistic about the fourth quarter.
The CEO Stephen Kaufer had an interesting statement to make. He was commenting on Instant Booking where customers can book a hotel room directly through Trip. An Analyst asked a question about the conversion of those booking at a higher rate. Mr. Kaufer stated that he needed to caution them on the conversion of those bookings at a higher rate because it was on a limited data set. But was interesting is that some of the hotel chains that they were pitching this idea of Instant Booking, which is commission based instead of click-based, claimed that Trip sounded like they were closer to an OTA. Of course Mr. Kaufer went on to object to that claim but in truth they are getting closer to being more than an OTA.

Finally, While Clicks are down and Net income is down also it would be hard to buy more of this company at this time. Especially with the company guiding Q4 to be weak. We have seen net income flat in Q2, down in Q3, and trending down into Q4. But this company is building a strong business going forward. I am hoping to get this company cheaper. I said the last report that I would buy more if Trip was down below a P/S of 11 and I did. But now it is below a P/S of 9 which is a good price for the company but I want to see it cheaper before I buy another bite.

Andy

http://discussion.fool.com/trip-page-post-2-31358286.aspx

8 Likes

Thanks Andy for the thorough posts !

Click based advertising was still up 31% YOY. From what I recollect there was slight dip in trend line which they attributed to seasonal factors (Couple of years back they had the same dips in this quarter).

As a percentage of revenue Click based advertisement reduced to 70% from 74% this quarter, but then this quarter had other revenue increase 106% from 14% to 20% of total (Viator acquisition).

It’s a business with a sales growing at 35-40% and 30% revenue growth will likely continue for the foreseeable future with increasing benefits of network effects. Its really hard to break the moat provided by their database. Gross margins are an incredible 97%.

If they were careful about containing sales and marketing, bottom line can actually grow much faster. Back of envelope calculations if they had maintained sales and marketing at 39% of revenue, an additional 18 million would have straight gone to bottom line. So really that’s the only problem I see with this company for now, lack of focus on bottom-line which will keep stock prices choppy.

Whether longer term bets pay off remain to be seen, but this has all the makings of a blockbuster like PCLN.

1 Like

Thanks for the response swapsan. Your right they do have a lot of things going for them. Their rental business is growing nicely and I agree that if they were not putting more into sales and marketing they would have done better (They would have only been down 2% on net income) but the acquisitions and costs of the acquisitions has been dragging it down.

Viator did add to the top line for this quarter. I agree with you swapsan that this could be a great investment and I really think they are disrupting this space. I believe they will eventually become a super ota and that is why PCLN is trying to keep up with them and all the acquisitions they are making. I haven’t seen them under a P/S of 11 for awhile and if I can get another bite under P/S of 8 I will pick up some more.

Andy

2 Likes