trivago N.V.

good day ladies and gentlemen thank you for standing by and welcome to the trivago q1 earnings call 2025. i must advise you the call is being recorded today wednesday the 30th of april 2025. we are pleased to be joined on the call today by johannes thomas trivago ceo and managing director and robin harris trivago cfo and managing director The following discussion, including responses to your questions, reflects management's views as of Tuesday, April 29, 2025 only, unless expressly stated otherwise, in which case it reflects management's views as of today, Wednesday, April 30, 2025 only. Trivago does not undertake any obligation to update or revise this information. As always, Some of the statements made on today's call are forward-looking, typically preceded by words such as we expect, we believe, we anticipate, or similar statements. Please refer to the Q1 2025 Operating and Financial Review and Trivago's other filings with a SEC for information about factors which could cause Trivago's actual results to differ materially from these forward-looking statements. You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in Trivago's operating and financial review, which is posted on Trivago's investor relations website at ir.trivago.com. You are encouraged to periodically visit Trivago's investor relations website for important content. Finally, unless otherwise stated, All comparisons on this call will be against results for the comparable period of 2024. With that, let me turn the call over to Johannes.

Good morning, everyone, and thank you for joining us today. We are thrilled to announce that we have significantly accelerated our momentum in Q1 2025, surpassing expectations for both top and bottom line results. In light of this exceptional performance and our continued growth trajectory, we are pleased to announce that we are raising our full-year revenue growth guidance to mid-teens percentage and foresee a better-than-expected adjusted EBITDA profitability. These excellent results reflect the consistent and diligent execution of our strategic plan by our dedicated team over the past two years. Today, I'm pleased to provide you with an update on each of our three strategic focus areas. Our first strategic priority remains brand marketing, through which we continue to elevate our globally recognized brand. We remain committed to increasing both the efficiency and overall impact of our brand investments. Our AI-powered Jurgen Klopp TV creators, along with our localized campaigns for Brazil and Japan, are performing well and we are successfully driving brand revenue growth across all segments. We are also excited about our summer campaign, which has already launched in the US and will gradually roll out globally throughout May. Our recent performance clearly demonstrates the compounding effects of our brand marketing investments, and we continue to observe the marketing elasticity we had anticipated. This elasticity enables us to confidently scale our brand investment while maintaining a disciplined approach to our performance marketing channels. Our second strategic priority is to enhance our core hotel search experience. We empower travelers to book with confidence, saving them valuable time and money. Over the past quarter, our product teams have further increased the product testing velocity, delivering meaningful user experience enhancements and driving notable improvements in conversion rates. We have also made considerable progress in increasing member sign-ups by providing more exclusive deals and benefits for our logged-in users. Further, we have improved our map functionality, employed new AI-powered hotel filtering features, and introduced numerous popular web functionalities into our app. We have also expanded the coverage of AI-generated hotel highlights to more than 350,000 hotels and 11 languages. Most notably, we have leveraged advanced machine learning algorithms to deliver even more tailored hotel search results to our users. We are excited about the meaningful impact our investments in AI and machine learning are already having and their future potential to transform our hotel search experience. Our third strategic priority is to empower our partners to maximize their potential on Trivago. We are pleased with the evolution and overall health of our marketplace. Our partners increasingly recognize the high quality of leads provided, making Trivago a more attractive marketing channel. We have also made significant progress in expanding Trivago Book and Go to additional partners, helping them increase their conversion rates. We are also particularly excited with the outcomes of our strengthened strategic partnership with Holisto. The collaboration is yielding promising results, and we warmly welcome Holisto as part of the broader Trivago team. Overall, our dedicated team has delivered another quarter of strong execution and accelerated learning. Our strategic direction continues to advance as our teams remain focused on key priorities designed to create value for our users and advertising partners. We are grateful for our team's diligence, commitment, and creativity, which continue to propel Trivago forward. Thank you, and now I would like to hand over to Robin for a more detailed review of our financial results.

Thank you, Johannes, and good morning, everyone. We are thrilled to report that Q1 was an outstanding quarter for Trivago, significantly exceeding our internal expectations, representing another strong quarter. We achieved a 22% year-over-year increase in total revenues. In addition, April's performance continues to show strong double-digit revenue growth rates. Our impressive performance was primarily driven by strategic brand marketing investments and product enhancements. We recognize numerous attractive opportunities to further scale our brand marketing investments and expand our business. We are optimistic that our strong operational performance will translate into significant benefits for shareholders as we continue to execute our strategy. Now let's review our first quarter results and our 2025 outlook. Unless otherwise indicated, all comparisons for 2025 are on a year-over-year basis. In the first quarter, our total revenue reached 124.1 million euros, representing a 22% increase compared to the same period in 2024. We are pleased to note this marked our second consecutive quarter of growth. We experienced strong year-over-year double-digit growth across all three reporting segments, with referral revenues growing 44% in rest of world, 90% in developed Europe, and 80% in America. This growth was primarily driven by increased branded channel traffic and response to our ongoing brand marketing investments. Improvements to our booking conversion and higher traffic volumes. We also continue to observe healthy bidding dynamics on our platform when compared to the same period in 2024. During the first quarter, we reported a net loss of 7.8 million euros and achieved an adjusted EBDA loss of 6.5 million euros which was better than our internal expectations. Similar to our 2024 performance, we expect negative adjusted EBITDA in the first and second quarter of the year and anticipate positive adjusted EBITDA in the third and fourth quarter of the year. Operational expenses increased by 20.7 million euros, totaling 133.7 million euros for the first quarter. This was mainly due to a 21.4 million euros increase in selling and marketing, resulting from higher brand marketing investments made over the course of the quarter. Advertising spent increased by 10.4 million euros, or 31% in America, 7.3 million euros, or 50% in the rest of the world, and by 2.7 million euros, or 7% in developed Europe, driven largely by brand marketing investments in all segments. The overall increase in operating expense was partly offset by a €1.3 million reduction in general and administrative expenses during the quarter. Despite the significant scaling of our marketing investments, our ROAS remained globally stable at 118.1% for Q1 compared to 119.2% in the prior year. We observed a significant growth improvement in developed Europe, increasing from 121% in Q1 2024 to 134% in Q1 2025, while we observed reductions in the Americas from 114.5% to 102.7% and in rest of world from 125.1% to 120.3%. As of the end of Q1 2025, we have 118.6 million euros in cash and cash equivalents and no long-term debt continuing to maintain our strong financial position. We feel confident about the future as our product caters to cost-conscious consumers. We are optimistic about our outlook and therefore raising our full year 2025 guidance to mid-teens percentage revenue growth and positive adjusted EBITDA similar to last year's levels. looking further ahead we believe significant potential remains to further scale our brand marketing investments which we expect will positively impact our overall revenues as we steer towards regaining pre-covered revenue levels in the future with that let's open the line for questions operator we are now ready to take the first question at this time i would like to We can't hear you anymore, sorry.