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TripAdvisor Fell ~5% after Its Q4 Earnings

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Dec. 4 2020, Updated 10:43 a.m. ET

Earnings missed the estimates

TripAdvisor (TRIP) shares fell ~5% during after-hours trading on February 12. The company reported lower-than-expected fourth-quarter bottom-line results. The online travel agency posted an adjusted EPS of $0.27 for the fourth quarter, which fell short of analysts’ estimate by a few cents.

Apart from the earnings missing analysts’ expectations, TripAdvisor’s fourth-quarter results were reasonably good. The company’s quarterly adjusted EPS marked a substantial YoY (year-over-year) growth of 350% and reached $0.27 compared to $0.06 reported in the fourth quarter of 2017.

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Higher revenues and better cost management mainly drove the strong EPS growth YoY. TripAdvisor’s revenues for the quarter grew 8% YoY to $346 million due to the strong performance of its Non-Hotel segment. Weakness in the Hotel segment partially offset the overall sales growth. The total revenues beat analysts’ forecast of $342.8 million.

Due to efficient cost management, TripAdvisor lowered its costs and expenses as a percentage of revenues. TripAdvisor’s total adjusted costs and expenses as a percentage of revenues fell by 450 basis points YoY to 82.4%.

Higher revenues and lower costs led to an improvement by 500 basis points in the company’s fourth-quarter adjusted EBITDA margin. The adjusted EBITDA margin was 25% compared to 20% in the fourth quarter of 2017. In absolute terms, the total adjusted EBITDA rose 38% YoY to $87 million.

Management’s commentary

TripAdvisor’s management seemed impressed with the fourth-quarter results. Steve Kaufer, TripAdvisor’s CEO, said, “Our solid Q4 capped a very strong 2018.” He also said, “We reinvigorated Hotel segment profitability, reinforced our leading positions in Experiences and Restaurants and laid important groundwork for future growth. We are pleased with our progress and will continue to balance growth and margin to deliver maximum shareholder value.”

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TripAdvisor’s latest quarterly results show that the company has been well capitalizing on growth opportunities arising from improving world economies—mainly the US economy. The improving GDP, healthy job environment, and a steady rise in wages are driving travel demand in the United States. The online travel agency’s strong efforts toward improving its user base through enhancing mobile-centric product design, marketing, and promotional offers have been attracting new users.

Among other online travel agencies (IYW), Expedia (EXPE) reported a 48% increase in its fourth-quarter adjusted EPS last week. Booking Holdings (BKNG) is expected to report 15.3% higher EPS in the fourth quarter. However, Ctrip.com International (CTRP) is expected to report a loss of $0.22 in the fourth quarter compared to its EPS of $1.56 in the fourth quarter of 2017.

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