TripAdvisor reported quarterly results that beat expectations for profit but a shift to lower-value mobile traffic and increased competition dampened earnings growth.
The company’s adjusted earnings per share for the second quarter were unchanged from a year ago at $0.38, with share buybacks during the period helping boost EPS as adjusted net income fell 5%.
Revenue in the quarter increased 8% to $424 million. Analysts had forecast earnings of $0.30 per share on revenue of $431 million.
“In Q2, we successfully launched our streamlined hotel shopping experience and our new, multi-year brand advertising campaign and have seen some nice early signs,” CEO Steve Kaufer said in a news release. “Click-based revenue is growing this year, and we believe our ongoing initiatives position our hotel segment for longer-term growth.”
But revenue for the hotel segment, TripAdvisor’s largest, increased only 3% to $326 million, with stronger performance in click-based and transactional revenue offsetting weaker gains in display-based ads and subscription revenue.
“TripAdvisor continues to struggle with its transition into travel bookings from a strictly travel recommendations site,” Madison.com said.
On the non-hotel side, which TripAdvisor calls “attractions,” revenue rose 31% to $98 million. “We continue to execute well against our stated three-to-five year growth strategy in our non-hotel businesses, and these results highlight our continued growth opportunity and this segment’s attractive longer-term margin potential,” CFO Ernst Teunissen said.
Kaufer noted that TripAdvisor customers don’t generally book attractions as part of a hotel booking. “They’re on our site because they are looking for attractions,” he said.
Average monthly visitors on TripAdvisor-branded websites and applications rose nearly 18% to 415 million in the second quarter .
But for the hotel business, as The Motley Fool reports, the shift toward mobile devices has reduced monetization and weakened pricing on click-based ads. TripAdvisor now expects mid-single-digit growth in click-based and transaction revenue for the full year, down from a previous forecast of growth in the double digits.