In this segment of the MarketFoolery podcast, host Mac Greer is joined by Motley Fool analysts Andy Cross and Matt Argersinger to discuss the latest report from TripAdvisor (NASDAQ:TRIP), which clobbered analysts' first-quarter expectations, in part thanks to non-hotel revenue that grew by an impressive 36%. But the bar those watchers had set was pretty low, and the company has had to reorient from earlier strategic errors. But investors seem to think it's doing so effectively. The Fools consider the investment thesis.

A full transcript follows the video.

This video was recorded on May 9, 2018.

Mac Greer: Shares of TripAdvisor having a huge day, up more than 20% at the time of our taping on earnings. Andy, the number that jumped out at me here, non-hotel revenue -- not hotel revenue -- non-hotel revenue, growing 36%. That includes TripAdvisor's Experiences and Restaurants categories.

Andy Cross: As our friend Dan Caplinger said on fool.com today, TripAdvisor's first quarter results exceeded all expectations. Well, fellas, the expectations were not very high. I mean, sales were up 2%.

Greer: A low bar.

Cross: A very low bar versus a negative number that analysts were expecting. Net income was much higher, on the earnings per share side, than what analysts were expecting. I think TripAdvisor has really struggled over the last couple years, ever since they tried the instant booking move to drive revenue directly from the booking operations versus using advertising for some of their big clients like Booking.com, formerly Priceline, and Expedia. That was a disaster. So, they pivoted, and now they're back. The big excitement that they continue to talk about, Stephen Kaufer, the CEO and co-founder, continues to talk about, is this non-hotel business, Mac, which is booking things like tours and restaurants --

Greer: Swimming with dolphins.

Cross: [laughs] Do you swim with dolphins, Mac?

Greer: Not typically. Not on a regular basis, no. [laughs]

Cross: Please put that on air at some point. So, it's not profitable. It was not as loss-making this quarter as it was last quarter, and that was really the big difference on the margin, so, I think investors are seeing that. But, also, they guided for the rest of the year, maybe about flat on the hotel side.

I'm still not a huge believer. It's frustrating, because TripAdvisor, they have more than 400 million active users every month going there to look and get reviews. They posted, I think, more than 600 million reviews in total. There's a lot of assets there. We parted ways with the stock in Stock Advisor after a few years of under-performance just because of the competitive pressures they're facing from the likes of Expedia and Booking.com. But, this non-hotel business seems to be the direction they're really pushing.

Greer: Yeah. It's always struck me -- I love, love, love the service, and I was a stockholder, but when I finally decided to sell the stock, I just realized, you know what? I'm not going to be booking my travel on TripAdvisor. I'm going to use it for the reviews, and then I'm either going to Expedia, or I'm going to the hotel site directly, or going to the airlines. And because that direct booking, I couldn't quite see that working out, I'm like, I'm going to get out of this stock.

Cross: And we've seen this when stocks underperform like this and they lose a lot of excitement from investors, when they have a quarter that says, "Hey, things aren't nearly as bad as they were," and there's a little bit, like I said, on the margin, the profitability is a little bit better, and their guidance is not as bad, the stock reacts like this. And we see today, the stock's up more than 20%.

Andy Cross owns shares of Booking Holdings. Mac Greer has no position in any of the stocks mentioned. Matthew Argersinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings and TripAdvisor. The Motley Fool recommends Expedia. The Motley Fool has a disclosure policy.