What happened
Shares of Tripadvisor Inc (TRIP 2.19%) were flying higher today after the travel-recommendation engine posted better-than-expected results in its first-quarter earnings report, blowing past analyst estimates. As of 11:47 a.m. EDT, the stock was up 22.1%.
Image source: Getty Images.
So what
Tripadvisor has struggled as it pivots to a direct-booking platform rather than just a travel-review site, but after the company reported several quarters of declining profit, investors were relieved to finally see bottom-line growth. Adjusted earnings per share improved from $0.24 to $0.30 as revenue grew modestly, with the non-hotel segment showing strong growth as the company scaled back on selling and marketing expenses. That result was well ahead of estimates at $0.16.
Overall revenue, meanwhile, was up 2%, to $378 million, as the hotel segment continued to shrink, but that still breezed past expectations at $362.1 million.
According to CEO Steve Kaufer: "We had a strong start to 2018; our Hotel results were ahead of our expectations, and we delivered accelerated Non-Hotel revenue growth. We are expanding our global platform for the benefit of users and partners and we are executing along our key product, supply and marketing initiatives that position our business for long-term profitable growth."
Now what
Tripadvisor also hiked its guidance for the year, saying it now expects growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), up from a previous forecast of flat EBITDA. It also sees revenue trends improving later in the year. Over the long term, the company expects to return to double-digit revenue growth.
Shares of the travel-review specialist now are up 50% over the last six months as the company seems to have passed the worst of its turnaround. Still, I wouldn't be overconfident in Tripadvisor's comeback as the online travel space is only getting more competitive, and click-based revenue trends will continue to be unfavorable with the growth of mobile. While there was plenty to cheer in this report, the challenges the company has faced aren't going away.
