TripAdvisor, Inc.

Good day and thank you for standing by. Welcome to the TripAdvisor third quarter 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Angela White, VP of Investor Relations. Angela, please go ahead.

Thank you, Felicia. Good morning, everyone, and welcome to TripAdvisor's third quarter 2023 financial results call. Joining me today are Matt Goldberg, President and CEO, and Mike Noonan, CFO. Last night after the market closed, we filed and made available our earnings release. In that release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call. Before we begin, I'd like to remind you that this call may contain forward may contain estimates and other forward-looking statements that represent management's view as of today, November 7, 2023. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I'll turn the call over to Matt.

Thanks, Angela, and good morning to everyone joining us today. For the third quarter, on a consolidated basis, TripAdvisor Group delivered revenue of $533 million, reflecting growth of 16% year over year. Viator achieved another solid quarter of outperformance, with 41% revenue growth versus last year, and TripAdvisor Core also performed better than expected. Across both Viator and TripAdvisor Core, the progress in our experiences offering continues to exceed our expectations, reflecting the large opportunity still in front of us in this category. The fork made meaningful margin improvement on healthy top line growth, nearly reaching break even for the quarter. Consolidated adjusted EBITDA was 127 million or 24% of revenue. These results reflect our continued progress in executing our segment strategies with strong financial and operational discipline. As a reminder, At TripAdvisor Core, we're focusing on engagement and delivering world-class guidance products to fuel our diverse monetization paths. At Viator, we are reinforcing our leadership position in experiences by investing in awareness, enhanced products, and repeat bookings to capture more market share. At The Fork, we're driving revenue growth with significant margin improvement this year by delivering value to both diners and restaurants, as the leader in the European dining market. I'm pleased with what our teams have accomplished in the quarter. We're leaning into the strengths of our existing assets while ensuring that we build and innovate for the future. We're executing more efficiently and effectively across each of our segments, and we continue to solidify our position as the most trusted source for travel and experiences, with TripAdvisor leading the way on the launch of the Coalition of Trusted Reviews, where we've brought together the leading platforms in the online review space to combat fake reviews and set global standards to best serve consumers. Let's get into each segment, starting with TripAdvisor Core, where we continue to make steady quarter-by-quarter progress on our strategy. I'm going to highlight a few examples of the proof points we're seeing in our ability to provide world-class travel guidance, use that guidance to drive deeper engagement with travelers, and position ourselves to translate that engagement over time into meaningful financial impact. Our strategy starts with innovating and enhancing our product, reinforcing TripAdvisor as a world-class guidance platform for planning and taking a trip, as well as in-destination decision-making. At our last call, we mentioned the promising early feedback from a significant upgrade to trips, our core trip planning and itinerary product, including a new generative AI-powered itinerary feature. We're still early in the journey and iterating continuously, but we're seeing compelling results. During the first three months in beta, members who created itineraries returned at a much higher rate within the first seven days than members who hadn't created an itinerary. And we've observed that higher return rate continuing for the full month thereafter as well. Importantly, members who build an itinerary also generate, on average, three times higher revenue than the average TripAdvisor member, and the average member already monetizes at approximately 10 times the rate of non-members. We believe the initial data is a good indication of early product market fit, and we're on a plan to launch this full trip planning and itinerary product on our mobile app on iOS and Android this quarter. Another stated priority is to drive deeper engagement with travelers, leveraging our unique content and data at scale. We continue to deliver progress in Q3. Let me share two examples. First, we've been leveraging generative AI and machine learning tools to bring together guidance from our community and our editorial team on a set of our most popular destination pages. Think New York City, Paris, and so on. Curating fresh, relevant content on these pages is driving over 15% more saves. So travelers are engaging more frequently by adding a desired hotel, restaurant or experience they discovered through our product to the trip they're planning. Second, we recently rolled out a test across tens of thousands of hotels that uses GenAI to summarize reviews and deliver clear insights to travelers on key quality attributes as they consider their choices. Let me give an example. For me, the single most important factor in booking a hotel is that I can get a quiet night's sleep We're now leveraging our data to provide a clear signal about the noise level of a particular hotel, along with other critical qualities we know are important to travelers, like atmosphere, service, value, and more. While Gen AI provides the perfect way to summarize content at scale, trust is still at the center of why people come to us. So in this feature, we share the specific underlying reviews from our community of travelers. that were used to generate each insight and provide a direct path to go deeper on what matters most to the traveler. These examples are just a few of the many encouraging proof points that our teams are driving, which gives us conviction in our strategic direction, prioritization, and sequencing. But we know this only matters if it translates to financial impact over time, and we're also pleased with the leading indicators we're getting on monetization. I mentioned before the significantly higher revenue we see among users who create a trip. As these users build an itinerary and engage more deeply, they're exposed to monetizable hotel and experience recommendations and to relevant ads from our partners, all of which we're increasingly integrating directly into this user journey. And the refreshed content on our destination pages is a perfect point in the journey to surface these options to a traveler. We've already observed double digit increases in experiences revenue on the pages with these content enhancements and we're just beginning to scale. All this adds up to more engaged travelers exposed to monetizable products. In experiences, for example, we've already exposed over 30 million more shoppers to bookable products year to date than in 2022. Given our position in the traveler journey and our scale, we see opportunities to expand bookable supply into other categories or geographies, driving value for travelers and partners alike. Turning to Viator, our position as the global leader in experiences continues to strengthen. We're serving more travelers, partnering with more operators, empowering more experiences storefronts than ever before. We reached 1.1 billion in gross bookings value this quarter. In an attractive category with a total addressable market projected to reach nearly 300 billion in GBV in the next few years, online players like us are set to disproportionately benefit as bookings increase and migrate online. We're working hard to accelerate this migration, differentiate Viator, and drive sustainable results. On the traveler side, our acquisition engine is gaining efficiency. Our brand marketing investments are yielding greater demand from more profitable channels, such as brand search, app, and direct traffic. And we're successfully turning this new audience into a loyal one. We're doing this in two ways. First, by improving the product experience, by easing search, enhancing the app, and improving our checkout experience, and in hundreds of other large and small ways. Second, we're making it simple and sensible to come back by providing programs and incentives that drive loyalty. Collectively, these are driving significant improvements to repeat behavior. Our most loyal users are our fastest growing, highest spending, and least expensive of all our users. On top of this compelling traveler experience, we're also reinforcing our supply asset. Viator has the world's largest high quality online supply of experiences. over 300,000 products from more than 55,000 operators. We've achieved this by being the best partner we can, by driving more bookings and delivering demand as seamlessly as possible. Our success here shows up in our high retention rates, as well as our operator engagement, with suppliers generating meaningfully more business through Viator the longer they remain on our platform. We also see it in the adoption of our Accelerate programs, More than half of eligible products are now opted into the program, with operators choosing to exchange a higher commission for increased exposure across our platform. This has contributed to sustained improvements in take rates and a clear signal of the meaningful value we're providing. Finally, at the fork, we continue to make progress on executing our strategy to achieve profitable growth. growing top-line revenue while reaching an adjusted EBITDA loss of $1 million, a significant improvement over last year. As we build on this performance, we remain on track to deliver on our commitment to exit the year at break-even profitability. We're achieving these results by leveraging our historical investments on both sides of the marketplace while focusing on operational execution. On the demand side, we observe strong bookings contribution from repeat diners, the majority of which engage with us through our app, our most efficient and profitable channel. On the supply side, our restaurant cohort performance exhibited sequential improvements on both volume and value per restaurant. We're also benefiting from operational efficiencies as we lead our teams to higher levels of productivity as the business continues to grow. Before I pass the call to Mike, I want to reiterate how excited we are about the work we're doing and how proud I am of our team and their focus entering the final stretch of the year. As we look externally, we can't predict how the global economy or geopolitical events may impact the strong activity and travel we've seen for the last year plus. It's normal for us to see immediate movement in destination intent and experience bookings when disruptions occur. which typically abate in the days or weeks following, whether related to extreme weather, natural disasters, or recently the activity in the Middle East. Overall, however, we continue to see resilient and durable travel intent in our data, driven by the enduring trend of consumers prioritizing travel and experiences over other discretionary spend. What we do know is that across the group, we're making tangible progress. At TripAdvisor Core, we're on track in a multi-year transformation journey, leaning into a future that diversifies our business to deliver new avenues for sustainable growth and profitability, as exemplified by our thriving experiences marketplace. At Viator, we're scaling to lead the global experiences category, delivering healthy levels of growth with improving unit economics, which gives us confidence in our ability to realize increased profitability at scale from the strategic investments we've made. And at the fork, we're executing in a fragmented market with a compelling value proposition and competitive differentiation. We'll continue to leverage historical investments as we progress this segment to profitable growth in the near term. With that, I'll turn the call over to Mike.