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How TripAdvisor’s Top Line Performed in the First Quarter

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Sales missed expectations

TripAdvisor (TRIP) reported a dismal top-line performance for the first quarter. The company reported revenues of $376 million, which fell short of analysts’ forecast of $386.8 million. Moreover, quarterly revenues also fell 1% YoY.

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Starting in the first quarter, TripAdvisor revised its reporting structure to highlight its fast-growing businesses. The company spins off its business into three financial reporting segments: Hotels, Media & Platform (or HM&P), Experiences & Dining (or E&D), and Other.

The H&M segment, which accounts for ~68% of TripAdvisor’s revenues, remained flat YoY at $254 million. However, excluding the impact of the foreign currency exchange rate, the company anticipates the division’s revenues to grow 3% YoY.

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Revenues from the E&D segment (21% of total revenues) increased 29% YoY to $80 million. Excluding foreign currency headwinds, revenues for the segment grew approximately 35%. The company revealed that it would continue investing in supply and marketing to accelerate E&D products and drive attractive returns over the long run.

The company’s Other segment (accounting for 11% of the total revenue) includes revenues from rentals, SmarterTravel, Flights/Cruise, and TripAdvisor China. The division’s revenues declined 33% YoY to $42 million due to the removal of some marginal and unprofitable revenue sources.

Peers’ performance

Apart from TripAdvisor, Expedia (EXPE) is the other online travel agency, which has reported its first-quarter results. Expedia’s first-quarter revenues increased 4% YoY to $2.61 billion due to decent travel demand in the US market. However, the top line missed analysts’ expectations of $2.69 billion.

Booking Holdings (BKNG) and Ctrip.com International (CTRP) will report their financial results in a few days. For Booking Holdings, analysts predict a flat top-line performance while for Ctrip they anticipate revenues to grow 19.8% YoY.

About 140 US-traded ETFs have invested in TripAdvisor stock. Among them, the Invesco S&P 500 Equal Weight Communication Services ETF (EWCO) is the biggest investor and has allocated ~4.5% of its funds in the stock.

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