Image source: TripAdvisor.

TripAdvisor (TRIP 0.84%) is a company in transition. The global rollout of its Instant Booking platform sees TripAdvisor moving from a business model based on selling ads toward one that sells direct bookings for hotels and flights. That means the company will now recognize a significant portion of its revenue at the time of the customer's stay rather than the time of his or her clicking. As it continues to evolve into a one-stop shop for all things travel, here are a few things investors should monitor closely, things that management perhaps does not want investors to focus on.

Revenue and EPS declines -- a temporary blip?

In the second quarter of 2016, total revenue declined 3% to $391 million, with the hotel segment (TripAdvisor's largest by far) declining 8%. The biggest reason? Click-based ad revenue -- which makes up more than half of total revenue -- fell 15% to $201 million. While this looks bad on the surface, keep in mind it's the strategic path the company has chosen to compete more directly in the travel-booking game. In coming quarters, TripAdvisor hopes this drop-off in ad revenue will be offset by revenue generated from Instant Booking. And since this revenue isn't realized until a customer completes a stay, that timing has the potential to make revenue results -- when compared against the previous year -- look worse for another quarter or two.

Earnings per share for the second quarter fared even poorer, falling 42.5% to $0.23. The big factor here was spending on technology and content -- which grew 24% to $62 million for the period. The global launch of Instant Booking meant that TripAdvisor incurred significant costs related to its expansion into direct hotel bookings, airline reviews, and an improved mobile experience.

Though both of these results missed analyst estimates, CEO Steve Kaufer says the company is playing "the long game" and will continue to make investments to create the best user experience in the industry. These efforts are already yielding success, according to management. A return to overall revenue growth would do a lot to soothe investors' anxiety.

Mobile hasn't found a foothold

Mobile has always been a challenging platform for advertising, with its smaller screen size, and the challenge persists with Instant Booking. Monetization rates for mobile users are currently only 30% of the rate of desktop users, which obviously leaves huge room for improvement.

That said, it's still early days for TripAdvisor's mobile efforts around Instant Booking, and there are a few bright spots. Phone-based click and transaction revenue grew more than 30% in the second quarter, with mobile traffic representing around a third of total shoppers, a number that's increasing with every quarter.

As the company transitions to a mobile-first mindset, one thing that may help is its focus on driving more phone users to its mobile apps. TripAdvisor's app metrics look relatively healthier, with click and transaction revenue growing by 50% in the second quarter. And app users generate around double the repeat revenue from other devices.

Google wants a piece of the action

Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google recently launched Google Trips, an online travel app that may signal the search giant's intent to compete with the likes of TripAdvisor, Priceline Group (NASDAQ: PCLN), and Expedia (NASDAQ: EXPE). Today, Google Trips offers many of the same features as TripAdvisor, providing timely travel information -- including attractions and restaurants -- on 200 worldwide destinations.

Additionally, Google Trips' ability to integrate with Gmail and Google Maps is designed to appeal to travelers who want to simplify planning and managing their itinerary. Google Trips automatically gathers all the details about your trip from your Gmail account and then maps out local suggestions for you based on data from other travelers.

Although Google Trips doesn't currently allow you to book flights or hotels as TripAdvisor does, it offers travelers an alternative when it comes to researching local restaurants and attractions. Alphabet's deep pockets and massive reach could eventually become a real competitive headache if it's able to begin poaching from TripAdvisor's hundreds of millions of users.

Is it time to panic?

Speaking as a shareholder who has seen TripAdvisor adapt swiftly to changes in traveler preferences over the past several years, I would say panic is not warranted. While the aforementioned red flags are real, TripAdvisor has quite a few things going for it, including 350 million unique monthly users, a non-hotel business that's still growing like gangbusters, and robust free cash flow of around $218 million last quarter. If the coming quarters show both a return to revenue growth and to mobile customers who embrace Instant Booking on a global scale, investors should be rewarded for staying the course.