Trivago says its strategy of optimizing advertising spend and improving traffic quality for advertisers has led to a second quarter of double-digit growth in net income.
In results for the fourth quarter of 2018, the company reports net income of €11.7 million compared to a loss of €9.6 million for the same quarter in 2017.
Net losses for the 12 months ended December 31 are €20.8 million compared to a figure of €13 million year-over-year.
Adjusted EBITDA is €28.6 million for the fourth quarter compared to a loss of €8.7 million in the same period during 2017.
The hotel metasearch brand saw an improvement in revenue per qualified referral, increasing 13% to €1.44 in the fourth quarter.
According to a statement, while the shift to focus on profitability has seen improvement in return on advertising spend, a reduction in advertising spend has led to a decline in both revenue and qualified referrals.
Total revenue reported by Trivago decreased 8% year-on-year to €166.8 million and was down 12% to €914.8 million for the 12 months ended December 31, 2018.
The company says it expects adjusted EBITDA for 2019 of between €50 million and €75 million while total revenue will decrease for the first half of the year and increase in the second half compared to the same periods in 2018.
Highlights for the quarter include an increase in the availability of alternative accommodation on the platform with more than 1.5 million units now available.
Talking to Phocuswire, Rolf Schrömgens, CEO and founder says the company is not treating private accommodation as a different category because the market trend is for a merging of the different categories.
"It's harder and harder to say this is an apartment and this is a hotel. Seeing those ideas merge, we think we also have to have a search which includes all of them and we're tackling it in a gradual way. That's why we can maintain the level of commercialization, we see an improvement in conversion and an improvement in user value by injecting alternative it step-by-step into our search results."
Schrömgens also talked about rolling out initiatives in partnership with advertisers in 2019 that are around improving the landing page experience. He says Trivago is being more flexible in how that landing experience looks.
Overall, he says that with the fourth quarter exceeding expectations in revenue and profitability, the company will look to take more risk again.
"For us it was important to do the step change and focus more on profitability because more profitability gives you more independence to take independent decisions. While it is important to fail, take risk and think long-term, we wanted to be more confident that the business could achieve healthy margins, but you have to take risk to move forward, learn and bring the product forward."