Key metrics to track
Return on advertising spend (or ROAS) determines the effectiveness of Trivago’s huge ad spends. Revenue per qualified referral (or RPQR) determines Trivago’s ability to mine its users. Trivago’s unique visitors are its qualified referrals.
Trivago’s ROAS grew 116.1% for the nine months ended September 2016. For the nine months ended 2016, RQPR fell 6% to 1.40 euros compared to 1.51 euros in the nine months ended 2015. For the nine months ended September 2016, qualified referrals grew 58.6% to 413.1 million. For more details on the company’s metrics, please read Analyzing Trivago’s Key Metrics.
Impressive revenue growth
Trivago’s revenues rose an impressive 90.0% CAGR[1. compound annual growth rate] from 2010 to 2013. Although its growth has slowed down, it is still substantial. Its revenues grew 43.0% year-over-year (or YoY) to $324.6 million in 2015 and 38.0% YoY to $657.4 million for the nine months ended September 2016.
No profit yet
As we noted previously in this series, Trivago spends heavily on television ads—so much so that its expenses currently outweigh revenues. As a result, the company has yet to book a profit. For 2015, Trivago reported an operating loss of $52.1 million. Its operating loss was $56.5 million for the nine months ended 2016.
For details on Trivago financials, please read Analyzing Trivago’s Financials: Revenue at the Cost of Ads.
No stake sale by Expedia
As opposed to the TripAdvisor spin-off, the Trivago stake sale is not a spin-off. Expedia (EXPE) doesn’t expect to sell any of its shares in Trivago. This could limit shareholders’ ability to influence the company.
You can gain exposure to Expedia through the First Trust Dow Jones Internet ETF (FDN), which has 3.0% of its holdings in the company. FDN also has a 1.7% holding in rival TripAdvisor (TRIP), but none in Priceline (PCLN) or Ctrip.com (CTRP).