TripAdvisor (TRIP) Q3 revenue misses out, revenue grows year-over-year

TripAdvisor TRIP reported third-quarter 2022 adjusted earnings of 28 cents per share, missing Zacks’ consensus estimate of 28.2%. Net income decreased 24.3% sequentially. Nevertheless, it increased by 75% compared to the figure for the quarter of the previous year.

Revenue of $459 million jumped 51% year over year and 10% sequentially. The same also exceeded the consensus mark of 3.1%.

Revenue growth was driven by increased consumer demand for services related to the travel industry.

In the third quarter, the average monthly number of unique users on Tripadvisor-branded sites increased by 8% compared to the level of the year-ago quarter.

The good performance of experience offers, the recovery of the Tripadvisor Core, Viator and TheFork segments, and the increase in bookings to European destinations continued to be tailwinds.

However, unfavorable foreign currency movements and macroeconomic headwinds affected quarterly performance.

TripAdvisor, Inc. Awards, Consensus and EPS Surprise

TripAdvisor, Inc. price-consensus-eps-surprise-chart | Quote from TripAdvisor, Inc.

Quarterly details

TripAdvisor reports revenue under three segments: Tripadvisor Core, Viator and TheFork.

Tripadvisor Core: Revenues totaled $284 million (representing 62% of revenue), up 34% year-over-year. Revenue from Tripadvisor-branded hotels, including hotel auctions and B2B subscription offers, increased 31% from the year-ago quarter level to $188 million. Revenue from the Tripadvisor-branded display and platform jumped 14% year-over-year to $33 million. Revenue from Tripadvisor Experiences and Restaurants (including $34 million of inter-segment eliminations) was $45 million, up 96% year-over-year. Other revenue including rentals, flights, cars and cruise revenue increased 6% from the year-ago quarter level to $18 million.

Viator: Revenues totaled $174 million (38% of sales). The figure soared 138% from the year-ago quarter level, due to seasonality, pent-up travel demand and an expansion of the travel experiences category.

The fork: Revenue was $35 million (8% of revenue), up 17% year-over-year. The rise was attributed to strong demand for TheFork’s products in major European markets.

Operating results

TripAdvisor’s sales and marketing costs increased 58% year over year to $234 million. This downside is driven by higher spending on search engine marketing and other online traffic acquisitions across all segments and businesses to meet growing consumer travel demand amid the travel industry recovery period. .

General and administrative expenses increased 22% from the prior year quarter level to $45 million, due to increased headcount and higher digital service taxes in Europe.

Technology and content costs of $55 million increased 6% year over year.

TRIP reported operating profit of $70 million for the third quarter, compared to $16 million in the same quarter last year.

In the current quarter, total adjusted EBITDA margin was 25%, compared to 24% in the third quarter of 2021.

Balance sheet and cash flow

As of September 30, 2022, cash and cash equivalents were $1.07 billion, compared to $1.05 billion as of June 30, 2022.

Long-term debt as of September 30, 2022 was $836 million. TRIP’s long-term debt was $835 million as of June 30, 2022.

Cash flow from operating activities was $60 million for the current quarter, compared to $295 million in the prior quarter.

Additionally, free cash flow was $46 million in the third quarter.

Zacks Ranking and Stocks to Consider

TripAdvisor currently carries a #3 Zacks rating (Hold). Some top-ranked stocks in the retail and wholesale sector are Ross Stores ROST, Arhaus ARHS and The Kroger KR, each wearing a Zacks rank #2 (buy) at present. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ross Stores has lost 18.5% since the start of the year. The long-term earnings growth rate of ROST stock is currently projected at 10.5%.

Arhaus has lost 29.3% since the start of the year. The long-term earnings growth rate for ARHS stock is currently projected at 14.3%.

Kroger has gained 3.5% since the start of the year. The long-term earnings growth rate for KR stock is currently projected at 11.7%.

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