trivago N.V.

Good day ladies and gentlemen, thank you for standing by and welcome to the Trivago Q4 Earnings Call 2025. I must advise you, the call is being recorded today, Wednesday the 4th of February 2026. We are pleased to be joined on the call today by Johannes Thomas, Trivago CEO and Managing Director, and Wolf Schmuhl, Trivago CFO and Managing Director. The following discussion, including responses to your questions, reflects management's view as of Tuesday, February 3rd, 2026 only, unless expressly stated otherwise, in which case it reflects management's view as of today, Wednesday, February 4th, 2026 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 Q4 2025 operating and financial review and Trivago's order of violence with the 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 from the comparable period of 2024. With that, let me turn the call over to Johannes.

Good morning and thank you for joining our Q4 2025 earnings call. We are thrilled to share the results of an exceptional year 2025 in our fourth consecutive quarter with double-digit year-over-year growth in referral revenue and higher than expected profitability. For the full year 2025, we exceeded both our top and bottom line expectations, despite material FX-related headwinds, delivering 19% year-over-year total revenue growth and 15.8 million euro in adjusted EBITDA. We closed the year with an exceptionally strong fourth quarter, achieving 27% year-over-year total revenue growth. In 2025, our strategic theme for the year was turning the tide, steering our focus on making our turnaround a reality. In 2026, we are rallying behind the theme, optimizing momentum, pushing frontiers, striking the right balance between growth and marketing discipline while continuing to innovate at the leading edge of our space. Our long-term strategy is playing out. we are confident that our brand and product flywheels can continue to drive growth and profitability. For 2026, we expect double-digit total revenue growth and are targeting at least 20 million of adjusted WDA. Despite strong comparables in the first half of the year, we anticipate our fifth consecutive quarter of double-digit total revenue growth in Q1 at higher profitability compared to previous years. Let me now highlight a few developments of the past year that demonstrate our outstanding progress the Trivago team has achieved since Andre, our CPO, Jasmine, our CMO, and I returned to the company in mid-2023. Our increased brand marketing investments since mid-2023 are paying off. Branded traffic revenue growth has outpaced top-line revenue growth significantly in the recent years. we have seen compounding effects and sustained attractive return on incremental brand marketing spend. Our core hotel search product continues to advance quickly. In 2025, we have improved our conversion, reaching 37% increase versus 2023, materially enhancing our unit economics. These gains are powered by AI and hundreds of experiments each quarter. We have evolved our member proposition, driving revenue from locked-in members to more than 25% of referral revenue, a 93% increase in Q4 2025 compared to Q4 2023. Our investments in empowering partners are translating into meaningful gains. Our partners reach more qualified leads than ever, and our transaction-based CPA model continues to exceed expectations. More than 140 partners have adopted this operating model and over 25% of referral revenue is now processed under this model. Referral revenue flowing through our higher converting Trivago Book and Go funnel has increased by 137% in Q4 2025 compared to Q4 2023. Zooming out, we believe we are well positioned within a 1.6 trillion travel market. with hotels representing about 500 billion of that opportunity. Our recent research shows that roughly half of travelers prioritize value for money in competitive prices. More than 40% of travelers compare prices between different booking sites. Our deal-oriented value proposition is tailored to this need, giving us conviction that we have a substantial room to grow. Let me now recap our key success drivers behind each of our strategic pillars and outline our priorities for 2026. For additional detail, please refer to our investor presentation on ir.trivago.com, which further demonstrates our progress and the points I'm about to cover. Our first strategic priority is to drive growth through brand marketing. Our brand engine continues to gain momentum. Our brand marketing team has run campaigns in 30 countries and have delivered success across all geographical segments in 2025. Our AI-powered summer campaign featuring global icon and soccer coach Jürgen Klopp has proven very effective, and our winter campaign started with promising results. In the last quarter, we followed a different approach compared to previous year. We leaned into latter markets, which have a different peak seasonality and invested in other key markets where we identified exceptional opportunities that we chose to exploit. We're consistently improving brand marketing efficiency and have expanded into new brand marketing channels. We remain disciplined and invest behind what we see is working. In 2026, we will continue to increase brand marketing spend, primarily in the markets we've focused on in the recent years. However, the pace of growth and brand spend will be substantially lower than in the past years, as we are now getting closer to our target brand marketing investment levels. Our priority will shift from entering new markets to further optimizing existing ones. Unlike prior years, when profitable regions subsidized newly activated markets to a greater extent, We expect the slower growth and incremental brand marketing spend, combined with compounding effects of the past investments, to make us progressively more profitable in 2026 and beyond. Our second strategic priority is to enhance our hotel search and price comparison experience. In 2025, we significantly increased the number of tests run on our platform, delivering meaningful product improvements and conversion rate gains. Advanced machine learning and LLMs have enabled us to develop and scale AI-powered features that are broadly adopted by our users. Our AI highlights and AI review summaries are changing how people discover and evaluate hotels in every search on Trivago today. Our AI-driven natural language search allows travelers to search hotels in entire new ways. We launched our AI Smart Search in Q4 2024 becoming the first hotel search platform to offer this capability. It's an advanced free text search powered by large language models that lets users find hotels using natural conversational queries. Since the launch, we have steadily increased its visibility, continuously refined both the UX as well as the underlying logic. As a result, we are seeing growing user adoption. our member proposition continues to strengthen as well, which we expect to improve retention. The key drivers behind this success are the exclusive rates that our partners provide to our members and our enhanced ability to personalize search results. Looking ahead to 2026, we will maintain our relentless focus on improving our core product. We see clear upside and further increasing conversion through high velocity testing, We'll continue to invest in AI power features that are central to offering a superior hotel search experience. We aim to lead in price perception, offering great deals and making them easy for users to find. We will also stay focused on expanding our member base. In addition, we will double down on Trivago Book and Go, which we aim to integrate more deeply in our user platform's journey with the goal to facilitate a more seamless booking experience. that further elevates conversion rates for our partners and Trivago. Our third strategic priority is to empower our partners to realize their full potential on our platform. Our transaction-based CPI model has seen broad adoption among small and mid-sized partners. These partners often lack resources and data scale needed to optimize bids and exposure effectively in our auction. By shifting risk and optimization complexity away from bidding, the CPA model helps smaller partners compete more effectively in our marketplace. Going forward, we will continue to deliver highly qualified users to our partners, equip them with even better tools, and increase our efforts to help them optimize their rates on Trivago. In particular, we'll focus on working with our partners to deliver more exclusive deals to our members. Finally, Let me share my enthusiasm on the evolution of AI. I see this as a huge opportunity for our business and shareholders. Our vision is to operate with 600 people as if we were 6,000. We are a fast, nimble team adopting AI in every possible way, using it to amplify our marketing impact, build previously unimaginable features for our users, and boost our team's productivity day by day. In short, we are doing far more without expanding our workforce. With that, I'll hand over to our CFO, Wolf, for a more detailed financial review. Thank you, Johannes, and good morning, everyone. We are excited to report that the fourth quarter reflected our profitable growth trajectory with a year-over-year total revenue growth of 27%. For the full year, we achieved total revenue growth of 19% year-over-year, an ad income of €11.2 million and an adjusted EBITDA of €15.8 million, despite FX-related headwinds. Our brand strategy, as well as our continuous product improvements, led to an all-time high in our conversion rate, which significantly improved our unit economics. Let's review our fourth quarter results and our 2026 outlook. Unless otherwise indicated, all comparisons for 2025 are on a year-over-year basis. In the fourth quarter, our total revenue reached €120 million, representing a 27% increase compared to the same period in 2024. We are pleased to note this marks our fifth consecutive quarter of total revenue growth. This growth was driven by yet another quarter of strong year-over-year double-digit referral revenue growth of 20% in America, 16% in the rest of the world, and 15% in developed Europe. We achieved this despite FX-related headwinds of approximately 5% globally. The growth was primarily driven by increased branded channel traffic in response to our ongoing brand marketing investments. Strong creatives and the diversification of our branded marketing channels create further potential to scale and reduce our dependency on search engines. During the fourth quarter, we reported a net income of 14.5 million euro and achieved a better than expected adjusted EBITDA of 11.3 million euro. Operational expenses increased by 26 million euro, totaling 113 million euro for the fourth quarter. This was mainly due to a 19.7 million euro increase in selling and marketing, resulting from higher brand marketing investments made over the course of the quarter, and incremental expenses resulting from our acquisition of Trivago Deals, formerly Holisto. Advertising spend increased by €9.8 million or 43% in America, €4.3 million or 31% in the rest of the world and €3.8 million or 18% in developed Europe, driven largely by increased brand marketing investments in all Trivago core segments. Due to the scaling of our brand marketing investments in this quarter, global ROAS decreased from 162.9% in the prior year to 147.9% in 2025. We observed a reduction in ROAS year-over-year across all Trivago core segments during the fourth quarter, with Americas decreasing from 159.6% in 2024 to 137.5% in 2025. rest of the world decreasing from 148.3% in 2024 to 131% in 2025, and developed Europe from 176% in 2024 to 173.8% in 2025. As of December 31st, 2025, we had 130.9 million euros in cash and cash equivalents and no long-term debt underscoring our exceptional financial position. Although we are facing tough comps in Q1 and Q2 2026, we are off to an encouraging start in line with our expectations. We will maintain close discipline and keep our headcount stable by leveraging AI. We will further scale our brand marketing investments but on a lower level compared to previous years and make use of compounding brand effects in order to gradually increase profitability in 2026. For 2026, we expect double-digit percentage total revenue growth and an adjusted EBITDA of at least 20 million euro. With that, let's open the line for questions. Operator, we are now ready to take the first question.

We will now begin the question and answer session. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Navit Khan with B Riley Securities. Your line is now open. Please go ahead.