TripAdvisor tripped today. The sprawling user-review platform revealed its earnings for the second quarter of its fiscal year, and the company has disappointed Wall Street by doing worse than most analysts forecast.
The headline number: TripAdvisor missed analyst expectations as averaged by Estimize, reporting adjusted earnings per share of 55 cents -- as opposed to consensus estimates of 62 cents a share.
Until now, TripAdvisor had missed estimates only once since its 2012 initial public offering (IPO).
Why the hiccup: Part of the explanation for its slip is that net income rose only $1 million year-over-year — from $67 million in the second quarter last year to $68 million in comparable summer period this year.
The growth story: Click-based revenue growth was the vital driver of growth. It accelerated 28%, up from 16% in the first quarter. It was high in April (30%), though weaker in May and June. One reason: Its click-per-commission prices for metasearch leads rose.
The investor's takeaway: At its IPO, TripAdvisor opened at $31.30. Shares have since grown 243% to an official close today at $107.36. That said, the share price plunged in after-hours trading.
What's worrying: TripAdvisor doesn't expect to earn an outsize portion of the growth of those last day hotel bookings as its competitors. The last-minute trend is being driven by the consumer switchover from desktop to mobile bookings -- a trend that's boosting companies like Hotel Tonight, Priceline, and Hipmunk.
Mobile moves: When it comes to hotels, users are tending to see TripAdvisor as a resource only for advance planning, according to CEO Steve Kaufer during today's investor call. That's why he likes the move into restaurant recommendations, which is much more on demand.
What’s notable: Analysts focused many of their questions around revenue-per-hotel shopper, which the company said accelerated to 11%, from 1% in the first quarter. The company expects strong revenue acceleration between now and October.
What's missing: The company didn't reveal much about mobile product upgrades, such as its ongoing rollout of Instant Booking. The company also didn't break out revenue contributions expected from its acquisition of booking engine LaFourchette this year.
What's sluggish: Instant booking, where hotels allow customers to book rooms via TripAdvisor's platform, hasn't been an instant success. Kaufer partly blamed this on TripAdvisor's current mobile offering, which isn't driving enough perhaps enough bookings to make them come over to the new platform quickly.
What's next: Kaufer called out tours-and-activities as a category he's eyeing next, fitting in with speculation that it will live up to its name and focus on the total trip:
We think the opportunity in the restaurant space is phenomenal. It's hard for us to see a path whereby huge numbers of travelers and locals won't be making their restaurant reservations on their smartphone in increasing numbers globally.
The acquisition of LaFourchette is a fantastic use of the capital we've built up in our core business. The model works. There are other players in the space that have models that have worked and that have scaled.
Yes, it comes at expense of some of our EBITA today. But to us, it's not even in the "bet" category. It's a perfect opportunity for long-term growth.
Yes, we see other opportunities to help travelers beyond hotels and restaurants, certainly attractions and tours and guides and other travel related things. But there's only so much folks can do at one time. And we have some great partners in that space. And our focus at the moment is monetizing restaurants....
We've started at hotels, and then flights, and then vacation rentals, and then restaurants. And it's safe to assume we'll be going beyond where we are now.
Customer growth: It's apparent that TripAdvisor's leadership is mostly interested in integrating clients, such as new customer Best Western, into its metasearch, and destination marketing organizations in its display ads.
TV advertising is paying dividends: TripAdvisor says it is having success from its new TV commercials campaign, as measured by growth in Google search referrals. The TV campaign began in May, and will run through October in the US, France, and Australia.
The company's biggest blitz will come in the third quarter. Its total TV spend will be $30 million for the year. The company expects to budget more for TV next year.
Fun fact: This year has been a tipping point for the company to be truly global. It says its international revenue grew 53% in the quarter, year-over-year.
EARLIER:
Big Ideas, Big Data: TripAdvisor on where mobile is heading
Why TripAdvisor has a chance to eat the lunch of Booking.com
Wake up everyone – TripAdvisor lives up to its name, focuses on entire trip
12 questions about TripAdvisor TripConnect you were too embarrassed to ask
NB: Image courtesy World Travel Market.