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Weekly Studies

Trip Advisor Inc. (TRIP), Mid/Small Cap AI Study of the Week

Trip Advisor Inc. (TRIP), Mid/Small Cap AI Study of the Week

August 8, 2024

Weekly AI Study from the S&P 400 or S&P 600

Company Overview

TripAdvisor, Inc. operates through three main segments: Brand Tripadvisor, Viator, and TheFork. Brand Tripadvisor offers a global travel guidance platform with over a billion user-generated ratings and reviews on various travel experiences. Viator is an online travel agency specializing in booking tours, activities, and attractions worldwide, while TheFork is an online marketplace for dining reservations across Europe. The company has seen recovery and growth in travel demand post-COVID-19 and aims to leverage the expanding online travel booking market, particularly in experiences and restaurant reservations. TripAdvisor's strategy focuses on enhancing its brand and marketplace through investments in data, products, marketing, and technology, aiming for sustained revenue growth and improved profitability.

Revenue generation for TripAdvisor comes from several sources. The Tripadvisor-branded Hotels segment earns through click-based and cost-per-acquisition advertising and subscription-based B2B offerings to accommodation partners. The Experiences and Dining segment (Viator and TheFork) generates revenue through commission-based transactions from bookable experiences and dining reservations, along with additional B2B offerings for restaurants. The company also offers media and advertising opportunities across its platforms, with revenue based on cost per thousand impressions. Seasonal travel patterns and advertising investments significantly influence financial performance, peaking in the second and third quarters. TripAdvisor competes with various entities, including OTAs like Expedia and Booking Holdings, and online platforms like Google and Facebook. Key partnerships with major travel partners like Expedia and Booking contribute significantly to revenue. The company invests heavily in technology and infrastructure, utilizing a hybrid-cloud system and protecting its intellectual property through various legal means. Regulatory compliance, especially concerning data privacy, poses ongoing challenges. Founded in 2000, TripAdvisor underwent several ownership changes, with Liberty TripAdvisor Holdings currently holding significant voting power. As of December 31, 2023, the company employed around 2,845 people globally, emphasizing talent acquisition and a diverse workplace.

By the Numbers

Annual 10-K Report Summary for 2023:

  • Restructuring costs: $22 million (pre-tax) for employee severance.
  • Anticipated annualized cost savings: $45 million from workforce reduction.
  • Share repurchase program: $250 million initiated, $25 million spent to buy back 1,324,524 shares at an average price of $18.85 per share.
  • Tax settlement payment: $113 million to IRS, with a $49 million refund.
  • Anticipated MAP resolution outflow: $80 million to $130 million, with an increased income tax expense of $30 million to $60 million in Q1 2024.
  • Total revenue for 2021: $1,788 million (up from $1,492 million in the previous year).
  • Total costs and expenses for 2021: $1,662 million (up from $1,391 million).
  • Operating loss for 2021: $131 million.
  • Net loss before income taxes for 2021: $185 million.
  • Net income (loss) for 2021: $(148) million.
  • Brand Tripadvisor segment revenue increase: $65 million in 2023 compared to 2022.
  • Tripadvisor-branded hotel revenue increase: $9 million in 2023 compared to 2022.
  • Media and advertising revenue increase: $15 million in 2023.
  • Tripadvisor experiences and dining revenue surge: $42 million in 2023.
  • Viator segment revenue increase: $244 million in 2023.
  • TheFork segment revenue growth: $28 million in 2023.
  • Increase in cost of revenue: $33 million compared to 2022.
  • Rise in selling and marketing costs: $138 million compared to 2022.
  • Increase in technology and content expenses: $51 million compared to 2022.
  • General and administrative expenses increase: $19 million compared to 2022.

Quarterly 10-Q Report Summary for Q1 2024:

  • Incremental income tax expense: $42 million due to IRS adjustments.
  • Estimated net operating cash outflow for Q2 2024: $110 - $120 million.
  • Employee count: 2,829 people, with 59% in Europe.
  • Decrease in Brand Tripadvisor segment revenue: $4 million compared to Q1 2023.
  • Adjusted EBITDA improvement for Brand Tripadvisor: $6 million.
  • Decrease in Tripadvisor-branded hotels revenue: $9 million compared to Q1 2023.
  • Increase in media and advertising revenue: $3 million compared to Q1 2023.
  • Increase in experiences and dining revenue: $3 million compared to Q1 2023.
  • Viator segment revenue increase: $26 million compared to Q1 2023.
  • TheFork segment revenue increase: $6 million compared to Q1 2023.
  • Rise in cost of revenue: $6 million compared to Q1 2023.
  • Increase in technology and content costs: $8 million compared to Q1 2023.
  • Rise in selling and marketing costs: $4 million compared to Q1 2023.
  • Decrease in personnel and overhead costs: $2 million compared to Q1 2023.
  • Increase in general and administrative costs: $8 million compared to Q1 2023.
  • Increase in depreciation and amortization expenses: $1 million compared to Q1 2023.
  • Increase in interest income: $2 million compared to Q1 2023.
  • Net loss improvement: $14 million compared to Q1 2023.

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